Precise Mortgages has claimed that bridging borrowers could save money by using them over other bridging lenders.
This, it says, is due to the method it uses to calculate interest.
Precise Mortgages offers a retained interest product to fund monthly payments. However, it does not charge interest on the entire retained portion from day one instead it charges interest as the money is released to the borrower’s account.
Precise Mortgages claims, by way of example, that recently it and another well known bridging lender were both quoting on a £1.9 million deal over a term of 12 months. Both lenders were quoting a rate of 1.15% per month but even though the headline monthly rate looked the same the interest charged was £28,400 less with Precise Mortgages, a difference of 0.125% per month. This was as a direct result of only charging interest as and when the money has been released to the borrower’s account rather than on the whole retained portion from day one.
Alan Cleary, managing director of Precise Mortgages, said: “Borrowers and indeed many brokers are probably not aware of the inconsistent nature of how interest is calculated by bridging lenders. If all bridging lenders applied the method we use it would save borrowers over £12 million per year in interest payments.