LOAN: This is the amount your client would like to borrow. Depending on the option you take, fees and interest may be deducted from this sum. This sum cannot be more than a % of the property's value, typically 70-75%.Close
TERM: How long does the client want the bridge loan for? Remember to consider how the bridge will be repaid within this time frame.Close
MONTHLY INTEREST RATE: This is the monthly interest rate charged by the lenders you are considering. Typically, the lower the LTV, the lower the rate. Rates currently start from around 0.5% per month and go up to around 1.25%, depending on the complexities.Close
FEES: The lender will normally charge an arrangement fee for the loan, typically 2%. Your client is also likely to have to pay the lender's solicitor fee, which you may want to include an estimate of in here.Close
Retained:This is where the costs of the fees and also the interest over the term are retained from the gross loan. The amount the client will receive on day one will be after these have been deducted, but they will not need to make any monthly interest payments.
Serviced: This is where the client will pay the cost of the interest on a monthly basis. They will need to show the lender that they can afford the monthly payments. The fees for arranging the loan will still be deducted from the gross loan.
Rolled-up: This is where the cost of the interest is added to the loan on a monthly basis. The maximum LTV offered by the lender will include the anticipated interest to be added to the loan. This option usually works out a little cheaper than the other options, but is not offered by all lenders.