3 Options for Paying Interest on Bridging Loans: Which is Right for You?
There are 3 choices for interest with Bridging Finance, make sure you choose the right one for your circumstances
Bridging loans are short-term financing options that provide borrowers with quick access to capital to bridge the gap between purchasing a new property and selling an existing one. These loans are often structured so that the interest rate is a percentage of the loan amount, calculated on a monthly basis. For example, 1% or 2% per month.
When it comes to paying the interest on a bridging loan, there are three main options: retained interest, rolled up interest, and serviced interest.
Retained interest
Means that your interest payments are deducted from the gross loan amount and are used to meet the interest costs as they accrue. In other words, you pre-pay the interest on the loan. This can be a good option if you have enough cash flow to make the monthly interest payments and want to reduce the overall cost of your loan.
Rolled up interest,
Means that instead of paying a monthly interest payment, interest is added to the outstanding capital (calculated on a monthly basis), and you pay it all back when the loan is repaid. This can be a good option if you want to avoid making monthly interest payments, but it will increase the overall cost of your loan.
Serviced interest
Means that you will need to meet the interest cost monthly, as you would with a traditional mortgage. This is the most common way to pay interest on a bridging loan and can be a good option if you have a regular income and are able to make the monthly interest payments.
How you choose to pay the interest on your bridging loan will have a big impact on the total cost of the loan, your cash flow, and how much you will be able to borrow. It's important to consider all of your options carefully and choose the one that best fits your financial situation. Willow Private Finance can help you make the right decision by providing expert advice and seeking out your preferred option from lenders to ensure you are in the best possible position.
Who Are Willow Private Finance?
Willow Private Finance is a specialist mortgage brokerage that offers professional financial advice and assistance to clients seeking to secure a mortgage or refinance their existing mortgage. The company is dedicated to providing its clients with personalized and tailor-made solutions to meet their specific financial needs and goals.
With a team of highly qualified and experienced mortgage advisors, Willow Private Finance is able to offer expert advice and guidance on a wide range of mortgage products and options, including first-time buyer mortgages, buy-to-let mortgages, Commercial mortgages, Bridging finance, Lombard lending, and Development finance. The company also offers a range of services to help clients navigate the complex and often confusing process of securing a mortgage, including assistance with mortgage application and documentation, as well as ongoing support throughout the mortgage process.
In addition to its mortgage brokerage services, Willow Private Finance also offers a range of other financial services, including protection insurance and equity release.. The company's goal is to provide its clients with a comprehensive and holistic approach to finance and management, helping them to achieve their financial goals and secure their financial future.
Other articles that may be of interest -
Get Financing Fast: The Benefits of Bridging Loans for Individuals and Businesses - Click Here
Get the Funds You Need with Bridging Finance: High-Value and Large Loans Now Available from Growing Number of Lenders - Click Here
3 Options for Paying Interest on Bridging Loans: Which is Right for You? – Click Here
Why a Clear Exit Strategy is Essential for a Successful Bridging Finance Loan – Click Here
Unlock the Potential of Your Land Development with Land Bridging Finance – Click Here
Understanding the Different Types of Bridging Loans: Regulated vs. Unregulated – Click Here
Bridging Finance: The Quick and Flexible Solution for Property Developers– Click Here
Bridging Finance: The Short-Term Solution for Auction Property Purchases – Click Here
The Essential Guide to Open and Closed Bridging Finance: Understanding the Pros and Cons of Each Option –
Click Here
