What a VAT bridging loan costs
VAT bridging is priced like short-term property bridging finance. Because the loan is secured and the exit is a defined HMRC refund, pricing is competitive for the risk.
On a £1m standard-rated purchase the VAT is £200,000. A VAT bridge funds that £200,000 at completion; the HMRC refund on your next return repays it, so you only carry interest for a few weeks rather than tying up £200,000 of your own capital.
Four things that move your price
Loan to value
VAT bridges fund a defined VAT sum against a valued property, so leverage is comfortable and rates reflect it.
Term
The shorter the wait for the HMRC refund, the less interest accrues. Most bridges clear in one to three months.
Security position
A first charge prices better than a second charge behind a purchase lender.
Strength of the exit
A clean VAT position and a VAT-registered borrower make the refund exit low risk, which keeps pricing keen.
Rates & costs: FAQs
What are VAT bridging loan rates?
Rates are quoted as a monthly interest rate on the VAT funded, in line with short-term property bridging. Because the exit is a defined HMRC refund, VAT bridges often price better than open-ended bridging. We source terms from whole-of-market lenders for each deal.
How is the interest charged?
Interest is charged monthly on the amount drawn. It is commonly rolled up and repaid in full from the HMRC refund, so there is nothing to service month to month while you wait for HMRC.
What fees are there?
Expect an arrangement fee, charged as a percentage of the loan and added on completion. There may be valuation and legal costs depending on the security. We set out all costs before you commit, and there is no charge to enquire.
Is a VAT bridge expensive?
Because you carry it for only the few weeks until HMRC refunds you, the total cost is usually modest against the working capital it frees up. The calculator gives you an instant estimate for your own figures.
Get a firm quote for your purchase
Send us the purchase price, the VAT position and your completion date and we will come back with indicative terms.