Bridging loans are a type of short-term loan, often used by property investors or developers who need quick access to funds.
Whether you’re securing a property at auction, bridging the gap between selling and buying homes, or funding a renovation project, bridging loans can provide the fast capital you need.
However like any loan, there are fees involved, and it’s important to understand these before applying.
Fees Involved In Bridging Loans
Let’s look at the fees you’ll come up against with a bridging loan.
While these can vary from lender to lender, most bridging loans come with a number of common costs. These include:
Arrangement Fees
The first fee you’ll have to pay when taking out a bridging loan is the arrangement fee, also known as a facility fee.
This is charged by the lender for setting up the loan on your behalf. At Blue Square Capital, the arrangement fee is 2% of the loan amount.
For example, if you’re borrowing £250,000, the arrangement fee would be £5,000. This fee covers the work needed to review, process and approve your loan.
Bank Transfer Fee
Next is the bank transfer fee, which is a fee used to cover the cost of transferring the loan funds into your bank account or to your solicitor.
At Blue Square Capital, this fee is a fixed £25, which is low compared to other lenders.
This small fee means that your funds are transferred quickly and securely, allowing you to complete your property purchase or start your project as soon as possible.
Admin Fee
Another cost to you will need to pay is the admin fee, which covers the work involved in processing your application.
At Blue Square Capital, the admin fee is £999. This fee ensures that your loan application is handled efficiently, from your initial enquiry to the final approval.
Valuation and Survey Fees
Like a traditional mortgage, most bridging lenders need you to show a property valuation or survey.
This shows us that the property you are using as collateral is worth what you say it is. Valuation and survey fees depend on the value of the property, the company you use for the survey and the amount of the information needed.
At Blue Square Capital, these fees are variable and depend on the specifics of your project.
Solicitor Fees
Both you and the lender will need solicitors to handle the legal work involved in the bridging loan process. This ensures that everyone is on the same page when it comes to repayment terms, fees and any potential penalties.
Blue Square Capital works with specialised legal solicitors, and fees will vary depending on how big the project is and how quickly the work needs to be done.
The solicitor fees tend to be higher if the transaction is more complicated. While this cost is unavoidable, it is important to make sure that the legal aspects of your bridging loan are handled correctly, protecting both you and the lender.
Exit Fees
One of the biggest benefits of taking out a bridging loan with Blue Square Capital is that there are no early exit fees. This means that if your project completes earlier than expected, you won’t be penalised.
Many other lenders do charge exit fees, usually around 1% of the loan amount, when you repay the loan. These fees can add a significant cost, especially on larger loans.
For example, if you’re borrowing £250,000, an exit fee of 1% would cost you an extra £2,500 when you repay the loan. With Blue Square Capital, you don’t have to worry about this extra cost, making the loan more flexible overall.
How Much Will A Bridging Loan Cost?
The overall cost of a bridging loan will depend on a number of things, including the loan amount, the loan term, and the interest rate.
Bridging loan interest rates are usually quoted monthly rather than yearly. At Blue Square Capital, our interest rates start at 0.95%.
However, interest rates are just one part of the total cost, with fees such as arrangement, admin, and legal fees also playing a role. Make sure that you sit down and plan your project with these costs factored in, in order to avoid any nasty surprises.
How To Reduce Your Bridging Loan Costs
While there are fees that you will have to pay with bridging loans, there are a few ways to reduce your costs:
- Choose a lender with no early exit fees like Blue Square Capital, to save money on repayment.
- Work with a bridging loan broker who can help you find the best loan for your needs.
- Put down a bigger deposit, as this can reduce the loan-to-value ratio and potentially lower your interest repayments.
Bridging Loans Costs
Bridging loans come with extra fees, but they can provide a fast and flexible way to secure funding for property projects.
If you’re ready to apply for a bridging loan, Blue Square Capital can help you navigate the process smoothly and help you get the best deal.
Why Choose Blue Square Capital For A Bridging Loan?
Blue Square Capital specialises in providing flexible, fast bridging loans to suit a number of financial needs.
Our competitive fees and transparent loan terms make us an excellent choice for anyone looking to finance a property quickly.
Apply Now
Take the next step towards securing your property or project financing by applying for a bridging loan with Blue Square Capital today.
