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How Much Does a Bridging Loan Cost?
The total cost of a bridging loan includes interest, lender fees, and any applicable broker, legal and valuation fees. How much you pay depends on:
- The amount borrowed
- The interest rate
- How interest is calculated
- When you repay
Our bridging loan calculator uses a lender arrangement fee of 2% of the net loan requested, £270 in administration, and transfer fees, a £495 broker fee, estimated legal fees of £2,000, and a £40 redemption fee. Interest is calculated separately, and valuation fees are not included.
For example, a £250,000 net loan at 0.53% monthly interest would have an estimated borrowing cost of £16,030.91 if repaid after six months under the assumptions set out above. This includes the listed fees and monthly compounded interest, but excludes valuation fees.
This guide explains each charge, when you may need to pay it, and how to compare the overall cost of different bridging loan offers.
Key Takeaways
What to know when exploring and comparing bridging loan interest rates.
Interest is only part of the cost
Include lender, broker, legal, and valuation fees when comparing quotes. A lower monthly rate does not always mean a lower overall cost.
Check the funds you actually receive
Fees and retained interest can affect the difference between the total loan facility and the money available for your purchase or project.
Budget for costs paid separately
Our calculator includes a £495 broker fee, £2,000 estimated legal fees, and a £40 redemption fee. Valuation fees are additional.
Your repayment date matters
Repaying earlier may reduce interest, but savings depend on the lender’s calculation method, minimum-interest period, and repayment conditions.
Table of Contents
What Are the Costs of a Bridging Loan?
Bridging loan costs fall into three main groups:
- Interest
- Lender charges
- Fees for services such as brokerage, legal work, and valuation
The table below shows the figures used by our bridging loan calculator.
These provide a consistent basis for estimating costs, but your individual quotation will confirm the charges and payment arrangements for your loan.
| Cost | Calculator Figure | How to Budget for It |
|---|---|---|
| Interest | Based on the rate, balance and borrowing period | Monthly if serviced; otherwise according to the agreed loan terms. |
| Lender arrangement fee | 2% of the net loan requested | Added to the loan in this illustration. |
| Lender administration fee | £245 | Added to the loan in this illustration. |
| Telegraphic transfer fee | £25 | Added to the loan in this illustration. |
| Broker fee | £495 | Budget separately as an upfront cost. |
| Legal fees | £2,000 estimate | Budget separately; confirm payment timing and the scope of the solicitor’s quotation. |
| Redemption fee | £40 | Payable on repayment; shown separately from the loan balance in the example. |
| Valuation fee | Quoted separately | Not included in the calculator estimate or the worked example. Confirm any charge before proceeding. |
Figures follow our calculator fee schedule. Administration and transfer fees total £270. These are the assumptions used in our estimate, not a universal tariff for every lender. Legal fees are estimated; valuation is excluded. Your quotation confirms the charges applicable to your case.
Worked Example: The Cost of a £250,000 Bridging Loan
This example assumes a £250,000 net bridging loan secured against one property worth £600,000, with no outstanding mortgage. The agreed term is 12 months, with interest at 0.53% per month, rolled up and compounded monthly.
The £5,000 arrangement fee and £270 administration and transfer fees are added to the loan. This gives an opening balance of £255,270 on which interest is calculated.
The comparison below shows the estimated costs if the same loan is repaid after six months or at the end of the twelve-month term.
| Item | Repaid After 6 Months | Repaid After 12 Months |
|---|---|---|
| Net loan requested | £250,000.00 | £250,000.00 |
| Fees added to the loan | £5,270.00 | £5,270.00 |
| Opening loan balance | £255,270.00 | £255,270.00 |
| Estimated interest | £8,225.91 | £16,716.89 |
| Fees budgeted separately | £2,535.00 | £2,535.00 |
| Total borrowing cost, excluding valuation | £16,030.91 | £24,521.89 |
| Loan balance at redemption, excluding separate fees | £263,495.91 | £271,986.89 |
- The separately budgeted fees total £2,535: A £495 broker fee, £2,000 estimated legal fees and a £40 redemption fee
- Total borrowing cost means interest plus all the listed fees: It excludes the £250,000 capital borrowed and any valuation fee
- Loan balance at redemption means the outstanding loan, financed fees and accumulated interest: It excludes the fees budgeted separately; any unpaid charge due on redemption must also be settled
- Under these assumptions, repayment after 6 months reduces estimated interest by £8,490.98 compared with 12 months
- This assumes no additional early repayment charge or minimum-interest requirement that changes the calculation
Please note: This is an illustration, not a loan offer. Actual figures depend on lender terms, payment dates, interest calculations and the charges applicable to your case.
Calculate your own indicative bridging loan costs with our free bridging loan calculator:
Bridging Loan Interest Rates
Bridging loan interest is usually quoted as a monthly percentage. The amount you pay depends on the rate, the balance on which interest is charged, how interest is treated and how long the loan remains outstanding.
Our calculator’s indicative monthly rates range from 0.53% to 0.64% within its published bands up to 75% gross LTV. The applicable rate depends on loan size and LTV, and individual enquiries remain subject to lender assessment.
With the calculator’s rolled-up option, interest compounds monthly. Other products may use different calculations, so check whether your quotation charges interest on the net advance, a balance including financed fees, or an outstanding balance that increases as interest is added.
Repaying early may reduce interest, but the saving depends on the lender’s terms. Check the minimum-interest period, whether interest is calculated daily or monthly, and whether any early repayment charges apply.
For a full explanation of pricing, read our guide to bridging loan interest rates.
What Affects Your Bridging Loan Interest Rate?
Lenders assess the overall risk of an enquiry when deciding which rate to offer. Important factors include:
- Loan-to-value ratio: The relationship between borrowing and the value of the security. Confirm whether the lender uses net or gross borrowing when assessing its rate bands
- Loan size and term: Pricing can differ by loan amount and product. A shorter borrowing period may reduce total interest without changing the monthly rate
- Property and planned work: The condition, use, and complexity of a property can affect lender choice and pricing
- Repayment plan: A credible sale or refinance strategy helps a lender assess how the loan will be repaid
- Location and marketability: Lending criteria vary by area and by how readily a property could be sold or refinanced
- Borrower circumstances and product eligibility: Credit history, borrowing structure, and the applicable regulatory position can affect the products available
When you work with Clifton Private Finance, your dedicated broker will confirm whether the proposed loan is regulated and which lenders can consider it. Regulatory status alone does not determine the cheapest rate.
How Is Interest Charged on a Bridging Loan?
The interest arrangement affects your monthly cash flow, the funds available at completion and the amount needed to repay the loan.
- Rolled-up interest: You defer interest payments and repay the accumulated interest with the loan. Depending on the lender’s method, interest may be added to the balance and itself attract further interest. Our calculator models monthly compounding for its rolled-up option.
- Retained interest: An amount is set aside from the loan at the outset to cover interest for an agreed period. This reduces the funds available from the total facility but avoids monthly interest payments during the period covered. Treatment of unused retained interest on early repayment depends on the agreement.
- Serviced interest: You pay interest each month from your own funds. These payments do not reduce the capital, which remains repayable when the loan is redeemed.
Neither rolled-up nor retained interest is automatically cheaper. Compare the net funds received, the total charges, and the amount payable on your expected repayment date. The options available depend on the lender, product, and your circumstances.
Bridging Loan Fees Charged By Lenders
Lender charges cover arranging, administering and closing the loan. Check both the amount of each fee and whether it is paid separately, deducted from the advance or added to the balance.
1. Facility Arrangement Fees
Our calculator uses an arrangement fee of 2% of the net loan requested. On a £250,000 net loan, this is £5,000.
Some lenders calculate arrangement fees on the gross facility instead, which can produce a different charge. If the fee is added to the loan, it increases the balance and may also attract interest.
2. Lender Administration Fees
Our calculator includes a £245 lender administration fee. The description and amount of administration or drawdown charges can differ between lenders.
Check your quotation carefully so that a single charge described in different ways is not counted twice.
3. Redemption Fees
Our calculator includes a £40 redemption fee, payable when the loan is repaid. This is separate from the capital and interest outstanding.
Your lender’s redemption statement confirms the total amount required to settle the loan on a particular date.
4. Telegraphic Transfer Fees
Our calculator includes a £25 telegraphic transfer fee for transferring funds. Together with the £245 administration fee, this gives combined administration and transfer costs of £270.
5. Exit Fees
An exit fee is a separate product charge that some lenders apply when a loan is repaid. It should not be confused with the redemption administration fee or an early repayment charge.
Our calculator does not include a separate exit fee. If a proposed loan carries one, include it when comparing the total cost.
“A lower monthly interest rate doesn’t always mean a cheaper bridging loan. A product with a lower rate could have a higher arrangement fee or a minimum-interest period that makes it more expensive if you repay early. For example, if you expect to repay after two months, a loan charging at least three months’ interest could cost more than one with a slightly higher rate that charges only for the time you borrow. We compare the total cost over your expected borrowing period, including fees and repayment conditions, rather than choosing on the headline rate alone.”
Additional Bridging Loan Fees
Alongside interest and lender charges, costs may apply for brokerage, legal work, and any required valuation. Check what each quotation includes so that costs are neither omitted nor counted twice.
Valuation Fees
A lender needs to establish the value and suitability of the property used as security. Depending on its criteria, this may involve an automated valuation, a desktop valuation or an inspection.
Any fee depends on the property, its value and the work required. Our calculator does not include valuation fees, so obtain a quotation and add the cost to your budget.
A lender’s valuation is not the same as a detailed building survey commissioned for your own assessment of the property’s condition.
Legal Fees
Our calculator allows £2,000 for legal fees as an estimate. Actual costs depend on the transaction, the security, and the legal work required.
Ask your solicitor to confirm whether the quotation covers your legal work, the lender’s legal costs, VAT, and relevant disbursements. Do not assume the calculator allowance is a fixed quotation or that additional legal costs cannot arise.
Broker Fees
Our calculator includes a £495 broker fee. This covers our work in arranging the finance and is budgeted separately as an upfront cost.
Your broker will confirm the applicable fee, its payment trigger, and the terms before you proceed.
When Do You Pay the Charges For a Bridging Loan?
Some charges require cash before or at completion, while others may be added to the loan or paid when it is redeemed.
- Budget separately for upfront costs: Our calculator treats the £495 broker fee and £2,000 legal estimate separately from the loan balance. Your solicitor may request money on account, and any valuation fee should also be budgeted for when required.
- Check which fees can be financed: In our worked example, the 2% arrangement fee and £270 administration and transfer fees are added to the loan. Financing fees increases the balance and may increase interest. Availability depends on the lender and the permitted borrowing level.
- Allow for repayment charges: At redemption, you must settle the outstanding loan and applicable interest, together with the £40 redemption fee and any other charges specified in your agreement.
Ask for a breakdown showing the net funds released, costs payable separately, and the estimated repayment amount. This helps you understand both the overall cost and the cash you need at each stage.
How Can You Reduce Bridging Loan Costs?
Compare the total cost over your expected borrowing period rather than choosing solely on the monthly interest rate.
- Borrow only what you need: A larger balance generally means more interest and can increase percentage-based fees
- Prepare a realistic exit strategy: A well-prepared sale or refinance can help avoid unnecessary delays, although repayment dates cannot be guaranteed
- Compare early-repayment terms: Minimum-interest periods, exit fees, and charging methods can materially affect short-term borrowing costs
- Ask about suitable valuation options: An automated or desktop valuation may reduce costs where the lender’s criteria allow it
- Check legal representation options: Where suitable and available, one firm acting for both borrower and lender may reduce duplication. Confirm the quotation and any separate advice requirements
- Consider the security structure carefully: Additional security may improve pricing, but it also places more property at risk. Repaying an existing mortgage to obtain a first-charge bridge can introduce other costs, including mortgage early repayment charges
A broker can help you compare options on a like-for-like basis; including fees, net proceeds, and the expected redemption amount.
What If Your Repayment Takes Longer Than Expected?
If your sale or refinance is delayed, interest may continue to accrue. An extension, replacement loan, or missed repayment deadline can also introduce further charges, depending on the agreement.
Speak to your broker and lender as soon as a delay becomes likely. An extension is not guaranteed, and failing to repay borrowing secured against property can put that property at risk.
When budgeting, consider how you would manage a later exit rather than relying only on the earliest possible repayment date.
Why Would You Take Out a Bridging Loan?
Bridging finance can help when you need to buy before selling, meet an auction completion deadline, or purchase a property that is not currently suitable for a standard mortgage.
Whether it represents good value depends on the transaction.
Compare the full borrowing cost with the potential benefit, such as securing a dream purchase or completing essential refurbishment work. Any expected discount or profit should be assessed realistically rather than assumed to cover the finance costs.
You also need a credible repayment plan. If a sale or refinance takes longer than expected, additional interest and other charges could increase your costs. An expert bridging loan broker can help you assess both the intended exit and a contingency plan.
Read through our 100+ bridging loan case studies, breaking down the details of how bridging loan transactions work in practice:
Estimate Your Bridging Loan Costs
Use our bridging loan calculator to estimate interest, fees, and the loan balance at repayment using your borrowing amount, property values, and selected term.
The estimate includes the calculator’s lender, broker, legal and redemption fee assumptions. Valuation fees and any additional product-specific charges are excluded.
For a personalised breakdown, speak to our bridging team. We can assess your scenario and explain the net funds available, costs payable separately and repayment terms of suitable options.
Call us on 0117 959 5094 or make a no-obligation enquiry below.
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