How to Find the Best Bridging Loans

You've probably noticed that there aren't many 'comparison sites' for bridging loans - the ones that put multiple products into a table, allowing you to easily weigh the pros and cons.

Written by: Sam Hodgson

Unfortunately, bridging loans are somewhat too bespoke for that kind of side-by-side comparison that works for other loans, like mortgages. 

The rate you get varies greatly depending on your situation, and many lenders don't accept applications from clients directly anyway, so you have to go through a broker. 

So, if you can't fully rely on a bridging loan comparison site... 

How Do You Find The Best Bridging Loan For You?

You have two options to find the best bridging loans: 

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Bridging loan brokers are experts in the field and can quickly determine the right lenders to approach for your specific situation.

This means that although you'll pay a fee for their service, you're much more likely to find the best bridging loan for you at a competitive rate. 

And the entire process will probably be a lot quicker and smoother.

The general consensus is that sourcing a bridging loan yourself should only be done if you're experienced with the products and have used them before.

It's not to say you can't get one directly from a lender - especially if you know what you're doing - but unless you know the ins and outs of the industry, it's hard to say with confidence that you'll reliably find the best bridging loan for you.

Looking for a reputable, award-winning, friendly and professional broker service? Take a look at our bridging loan services page to find out what we offer and why you should use us.

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How to Compare the best bridge loans 

What Do Bridging Loans Cost? 

Do Lenders' Rates Vary? 

Do I Need a Broker?

Can You Go To Lenders Directly?

How Do Bridge Loan Brokers Help?

Are There Any Disadvantages?

How Do I Find The Best Bridge Loan Broker? 

How To Compare The Best Bridge Loans

Firstly, you need to determine what kind of bridging loan you need. If you need help figuring out what's best for your situation, a broker can support you. 

Here are some bridging loan rates we've recently secured for our clients (remember, interest rates and how much you can borrow depends on your situation):

• What type of loan do you need? – It is a good idea to determine early precisely what type of loan you'll need for your purposes. Some lenders specialise in different types of loans – for example, if you're looking to finance the purchase of a new home, you will likely want to secure a regulated loan for residential property. 

• Determine your borrowing needs – Before comparing bridge loans, it's important to determine how much money you need to borrow and how long you need the loan.

• How soon do you need the money? – In some cases, a bridging loan can be arranged within a few days after application. As a result, you can proceed with a property purchase or start a development project as soon as possible. It could, however, take you longer without the assistance of an experienced bridge loan broker. When comparing, it is essential to have a time frame for when you need funds and a solid action plan.

• Shop around – Compare rates and terms from several different lenders, including banks, private lenders and online lenders. Be sure to also check for any fees associated with the loan. Remember, some private lenders can only be accessed via a broker!

• Check for flexibility – Depending on your needs; bridge loans often allow "rolled up" interest – meaning interest on the loan outstanding can be paid off early. Additionally, there are usually no early repayment fees with bridge loans. When comparing, you will want to carefully read the terms and specifics to ensure they suit your situation.

• Look for experience: Look for a lender with expertise in providing bridge loans of the type you need, as they will be better equipped to understand your unique needs and structure the loan accordingly.

• Talk to a mortgage broker - A mortgage broker can help you compare bridge loan options and assist you in finding the best loan for your specific needs.

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How Much Does a Bridging Loan Cost?

The cost of a bridge loan can vary depending on a number of factors, including the loan amount, the lender, and the borrower's creditworthiness. 

Generally, a bridge loan will come with a higher interest rate when compared to traditional mortgages – this is due to a higher risk from the lenders' perspective.

The annual interest rate on a bridge loan can range from around 8% to 12% or even higher. But remember, rates are typically displayed monthly with bridging loans instead of annually like other loans. 

Additionally, many bridge loan lenders charge origination fees ranging from 1% to 4% of the loan amount. Other costs may include appraisal fees, closing costs, and prepayment penalties.

Related: Try our bridging loan calculator for an instant quote

Most importantly, there is no standard cost for a bridge loan as its overall cost is affected by several variables and is dependent on the length of the loan term – the shorter the term, the higher the interest rate will be. 

With this information, you can begin to compare multiple bridge loan offers closely and find better terms and rates.

Using a bridge loan calculator will give you a good starting point on what you can expect to pay. Again, a specialist broker can be beneficial as any initial costing you calculate may only partially reflect the best bridging loan we could secure for you. You can try our bridge loan calculator here. 

Do Lenders' Rates Vary When it Comes to Bridging Loans?

Interest rates on bridge loans vary among lenders. Several factors can affect the interest rate on a bridge loan, including the lender's underwriting standards, the loan-to-value ratio, and the borrower's creditworthiness.

Additionally, lenders will consider several key points when determining the risk factor:

• Creditworthiness – Lenders will look at the borrower's credit score and credit history to assess their ability to repay the loan.
• Collateral – Lenders will evaluate the value and condition of the property or deposit being used as collateral for the loan.
• Exit strategy – Lenders will want to know how the borrower plans to repay the loan – this could come in the form of selling the property or refinancing it with a traditional mortgage.
• Loan-to-value ratio – This ratio compares the loan amount to the property's value. A higher LTV (loan-to-value) ratio may indicate a higher-risk loan.
• Other factors – some other factors that lenders can consider are the property location, the market condition, the purpose of the loan, the experience of the borrower and the type of property.

Some lenders may offer a fixed rate for the entire term of the loan, while others may provide adjustable rates. The terms and conditions of the loan can also vary from lender to lender – this is why comparing bridge loans can become an involved process because of the many options. 

Do I Need a Bridging Loan Broker?

By applying for finance through a broker, you gain access to more options and can save time.

The cost of an additional broker fee can be well worth the advantages of preventing blunders or oversights, especially for the inexperienced.

Brokers can find suitable lenders based on your needs and help you avoid the obstacles associated with directly contacting lenders. 

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Can I Go Directly to Lenders Instead?

Lenders can be approached, but it's not recommended to do so directly if you're inexperienced or haven't worked with one before. People often don't recognise which lender best suits their circumstances since lenders have a wide variety of bespoke products and specialise in different areas. 

If you approach directly, you will lose access to a broker's network - you will not benefit from working with specialists who have established relationships with lenders. Moreover, bridge lenders prefer to organise finance through brokers rather than individuals. 

Ultimately, it will come down to what type of loan you need, if it's a bespoke product, or if you have a working relationship with any given lender. Regardless, going through a broker for a bridge loan is typically the most efficient way to secure finance. 

How Can a Bridging Loan Broker Help?

A competitive market demands swift action when purchasing or developing property. Your plans may be hindered or delayed if you cannot find a suitable lender and loan. Here is where a bridging loan broker can help.

However, whether or not you need a bridge loan broker will depend on your individual situation and needs. Here are some factors to consider:

• Experience and expertise –  A bridge loan broker has experience in the field and can help you understand each option's pros and cons. They can also help you navigate the application process and ensure you have the documentation to apply for a loan.
• Time-saving – A broker can save you time by shopping around for the best loan rates and terms on your behalf. This can be especially useful if you are in a time crunch to secure financing for a property purchase.
• Access to multiple lenders – A broker will typically have access to a wide range of lenders, increasing your chances of finding a loan that meets your needs.
• Tailored solutions – A broker can help you find a loan tailored to your specific needs and financial situation.
• Help understand the terms and fine print – A broker can explain the terms and conditions of the loan in layman's terms and help you understand the fine print.

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Ultimately, brokers will work through your interests to secure you the best deal. They create a competitive environment for lenders, which can lower rates, making them more favourable to borrowers.

Additionally, brokers can help clients put their best foot forward regarding applications, as an unsuccessful application can sometimes negatively impact credit scores. 

Are There Any Disadvantages to Using a Broker?

Depending on your circumstances, you may find that going through a broker gives you less control over the loan process – however, this would only apply to those experienced in bridging finance or those who have worked with lenders directly before and are seasoned property developers – rather than those looking to "bridge a gap" to purchase their next residential home, for example.

Most people will find that going through a broker simplifies the process and eases the stress of comparing the many choices of bridge loans – which to most, is well worth the fee! 

Need a Bridging Loan? Get in Touch With Our Specialists

Short-term financing can help you in time-sensitive situations - bridge loans offer speed and flexibility. With our help, you can find the best bridging loan deal for your situation.

At Clifton Private Finance, our bridge loan experts will help you determine what loan you need and find specialist lenders that might otherwise be unavailable. 

Besides guiding you through the entire process, we can negotiate the best rates and tailor a bespoke solution that best suits your circumstances.

To see what we can do for you, call us on 0117 205 4829 or book a free consultation below.

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