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Bridging Loan Calculator calculating the final value of a bridging loan is not exactly complicated. Bridging Loans come with legal fees and other factors such as the term required that can fluctuate depending on circumstance make a clear-cut valuation a possibility – and of course, bridging finance companies and brokers are not keen to make promises they cannot keep!
That said it is possible to make a fairly close estimate to your final bridging loan costs – and we’re here to help.
1 – Fill in the form
For the best (and simplest) way to calculate the cost of your proposed bridging loan, simply request a specialist advisor to contact you. With a few details, we can determine the best selection of loans for you and get back with near-accurate ballpark figures to help you budget the total costs you are likely to pay for your loan.
Still looking to work it out yourself?
2 – Know your LTV
Loan-to-value is the amount of money you can borrow based on the value of the property the loan is set against. Many bridging loan companies offer LTV amounts of 75% - meaning that if you are working against a property worth £400,000, your maximum loan opportunity is £300,000 and at 50% LTV the loan would be £200,000.
Of course, there are plenty of companies who are willing to go to a 100% LTV bridging loan, but other fees and interest rates may be higher and they would need to secure the extra 25% against another property to get to the higher loan to value.
3 – Estimate the fees
You will need to pay a 2.00% arrangement fee – this figure is currently static across the industry and very few providers move away from it. Take the expected total value of your loan and calculate 2% of it as your arrangement fee. On a £300,000 loan, this would be £6,000.
Your arrangement fee becomes part of the overall finance and does not need paying until the end of the term, so you don’t need to find it up-front.
Legal fees can be anything from a few hundred pounds to a few thousand. It’s worth estimating high, so perhaps look at £1500 for legal fees. Alongside this value (payable up-front) is the valuation fee, for which you should budget £500.
Additional fees can add weight to, put aside a few hundred for unforeseen items.
Total fees estimate: 2% + £2300
4 – Calculate the interest
The interest rates are provided and range from 0.50% (a stunningly-good rate) to 1.7% and more. Interest rates are calculated monthly and if they are not resolved until the end can compound, leading to you paying interest on interest.
On a £300,000 loan with 1% interest, the first month generates £3,000 in interest.
The second month sees 1% interest added to the £303,000 of the current value – or £3030. Month three adds £3060.30 and so on.
For a year-long term do this 12 times.
5 – Add it all up!
Loan value + fees + interest = total cost of bridging finance.
Remember to only apply for a bridging loan if you have already planned your exit strategy – knowing that you will be able to pay off the loan and move on to other things is key to taking out this type of short-term secured loan.
Easy Bridging Loans can arrange your loan with ease and will guide you through both the choice of loan and all of the processes that are associated with taking a bridging loan, because we specialise in this type of finance and nothing else, we will always have the answers to any problems that could be encountered along the way.
Get in touch now to discuss your requirement as professionals in this field and know the industry inside out, call us today or complete our online form to get things started.
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