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Bridging Loans

Interest rates can vary widely from around 6.50% per annum offer by a small number of High Street Banks to 18% per annum offered by a wider number of Specialist Bridging Loan Lenders. Arrangement fees can also be quite expensive ranging from 0.5% to 1.5% of the loan amount. Before we examine cheaper alternatives to Bridging Loans let’s look at a typical example of the cost of a Bridging Loan offered by a relatively competitive Specialist Bridging Loan Lender this will then gives us the base to compare alternative solutions.

Specialist Bridging Loan Lender - Example

Specialist Bridging Loan Lender

Loan Amount: £200,000
Interest Rate: 15% per annum
Arrangement Fee: 1.00% of the loan amount (£2000)
Loan Duration: 3 Months

Arrangement Fee: £2000
Monthly Interest Payments: £2500

TOTAL BRIDGING LOAN COSTS OVER 3 MONTHS: £9500 (£2500 X 3 + £2000)

As you can see Bridging Loans can be expensive, that said they might just be right for your situation both financially and emotionally. Often the financial aspect of purchasing a new property or your dream home comes secondary to the emotional attachment, within reason of course.

So let’s take a look at some alternatives to Bridging Loans. In the following section we will look at some viable alternatives to Bridging Loans and put them into some sort of pecking order based upon the potential money saving benefits when compared to a Bridging Loan offered through a Specialist Bridging Loan Lender (see example above).