When applying for a bridging loan, it’s important to research the different costs that are involved in the process, so that you’re aware of how much money you’ll be paying in total. Brokers such as Finbri, for instance, charge a broker fee which enables them to arrange you with the best possible loan that is tailored to your personal needs and circumstance. Here are the fees you need to be aware of, whatever your loan is for – from business ventures and properties, to tax obligations and investments.
Depending on the type of loan you apply for, and the circumstances associated with your application, there will be administration fees relating to each loan. These can be present from the application process through to the completion, so it’s best to know what these are ahead of time. This is an example of the kind of information you can research prior to your application, or questions you can ask when you first make contact with your lender.
Generally equating to approximately 1-4% of the total loan, broker fees will need to be paid if you use a broker to aid your loan process. These fees will go towards funding the assistance provided throughout your loan application, the review of bridging loans and the review of development finance solutions tailored to you – in a bid to find the most suitable solution for your personal circumstances.
The bridging loan lender you choose may charge a redemption fee to fund the withdrawal of money from your house or property that was utilised as security. This is due to the costs created when withdrawing this charge.
Sometimes called an ‘arrangement charge’, a facility fee is charged by the lender to the borrower, for providing the loan facility. While the amount of this fee will vary depending on the company you use, it usually works out as 2% of the total amount supplied.
The type of property you have will determine the cost of it’s valuation. Some properties may involve a specific firm that specialises in that certain type of property and the location in which it’s set – such as commercial or residential properties.
With the current pandemic disrupting multiple different factors in the valuation process, there has been a rise in the amount of ‘desktop valuations’ being carried out, particularly if the property being assessed is a simple and uncomplicated residential asset. These types of valuations don’t require a valuer to physically come to the site, which is ideal throughout lockdowns and social distancing measures.
Solicitors fees are charged to the borrower to reimburse the cost of the solicitors employed to set up and secure a fee over a property. As this involves legally binding documents and multiple types of paperwork to be completed, a fee is set to pay for this additional work.
As with any financial decision, there are always additional costs to consider. Bridging loans are no exception, but this guide should leave you well prepared.