Bridging loan rates have continued to fall over the past 12 to 24 months, and bridging finance is now available from just 0.6% per month.
In was as recently as 2009 that Dragonfly Bridging Finance entered the market, and they were then considered a first mover, which they have used to their advantage over the last 4 years or so. Dragonfly, backed by Octopus Investments, are now one of the largest short term finance providers in the marketplace.
More recently challenger bank Shawbrook has set out to become a leading provider of finance to SME’s and property professionals. Shawbrook currently offer leading bridging finance rates which start at 0.65% per month for residential properties, and they are prepared to lend up to 70% LTV at this price. Shawbrook are a deposit taking institution, which effectively means their cost of funds is significantly lower than many of their rivals, and as a result they can lend at attractive rates. Additionally, Shawbrook Bank seek to lend to experienced property people with a clean credit history – this reduces the number of bad loans, and enables them to lend at lower rates.
Bridging finance is no longer considered expensive money, only to be used as a last resort. In fact the majority of our clients continue to use bridging loans again and again, as high street lenders are not offering the products and service they require.
Traditional lenders continue to face challenges approving loans within short time frames, which can often lead to property professionals losing out on profitable deals. In addition, their appetite to lend against properties in need of refurbishment remains subdued. Short term lenders will not only fund refurbishment projects, but they may also have appetite to fund the costs of the refurbishment as well. Short term lenders now have appetite for heavy refurbishment projects, which is a relatively new move.
Precise bridging are also highly competitive when it comes to bridging loan rates, with finance also available from 0.75% per month for heavy refurbishments.
Large bridging loans are more commonplace and loans can be obtained for up to £25 million. Leading lenders such as Omni Capital are offering loans at this end of the market, secured against prime properties in prime postcodes. Rates for large loans are not set in stone, and Vision Finance will always run a competitive process, negotiating terms with several potential lenders, to ensure the best terms are obtained for our clients.
Commercial bridging loans do still attract higher rates. This is in part due to less competition in the market – there are more lenders offering residential bridging loans than commercial bridging loans – and part of this is due to the property being more difficult to exit in a downside scenario. However bridging finance rates do continue to improve for commercial loans, but borrowers can still expect to pay anywhere from 1% to 1.5% per month, depending on the condition, LTV, location, and use.
Please do get in touch with our Bridging team to discuss rates we would expect to obtain for your transaction. Contact us by email on firstname.lastname@example.org or on 0207 206 2500. We meet as many of our clients as possible, so do let us know when you are next in London.