Bridging costs

What a bridging loan actually costs

Bridging finance is priced differently to a mortgage, and the headline rate rarely tells the whole story. Once you understand the four or five cost lines that make up a bridge, comparing lenders becomes far simpler.

Category: Costs & pricing

Product: Bridging Finance

Monthly interest: Commonly around 0.5%–1.25% per month
Arrangement fee: Typically 1%–2% of the loan
Exit fee: Often none, occasionally 1%
Term: Usually 1–24 months

Interest: rolled, retained or serviced

Most bridging interest is either rolled up (added to the balance and repaid at redemption), retained (deducted from the advance up front), or serviced (paid monthly). Rolled and retained structures avoid monthly outgoings, which is why they suit refurbishment or auction deals where cash flow is tight. Serviced interest usually secures a slightly lower headline rate but requires proof of affordability. Which structure fits depends on your exit and how confident the lender is in the timeline.

Arrangement and lender fees

Lenders typically charge an arrangement fee of 1%–2% of the gross loan, deducted at completion rather than paid separately. Some specialist lenders add a smaller broker or facility fee on top. These fees are negotiable at the margins depending on loan size and complexity, and it's worth asking whether the fee can be added to the loan rather than paid from your own funds at outset.

Valuation, legal and third-party costs

You'll pay for an independent valuation (see our dedicated guide) and for the lender's solicitors as well as your own — a cost often overlooked when comparing headline rates. On complex titles or commercial security, legal costs can run to several thousand pounds. Ask for a full costs breakdown before instructing, not just the rate card.

Exit fees and early redemption

Some bridging products still carry an exit fee, typically 1% of the loan, charged when you redeem. Others waive it entirely. Unlike term mortgages, most bridges have no early repayment charge for redeeming ahead of schedule — in fact lenders usually want you to exit quickly, since it reduces their risk. Always confirm this in writing before signing.

Comparing offers properly

The only fair way to compare two bridging offers is to calculate the total cost in pounds over your expected term — interest, fees, valuation, legals — rather than comparing headline monthly rates in isolation. A 0.1% lower rate can be outweighed by a higher arrangement fee on a short-term deal.

Frequently asked

Is bridging finance expensive compared to a mortgage?

Per month it costs more than a mainstream mortgage, reflecting the speed and flexibility on offer. Over a typical 6–12 month term the total cost is often lower than people expect once it's set against the opportunity it unlocks, such as securing a purchase or avoiding a chain collapse.

Can fees be added to the loan rather than paid upfront?

In many cases yes — arrangement fees and rolled interest are usually deducted from the gross loan at completion, so you don't need to find that cash separately. This is one reason bridging suits time-pressured purchases.

Do all bridging loans have an exit fee?

No. Some products carry a 1% exit fee, others have none at all. It's one of the first things we check when comparing lenders on your behalf, because it can materially change the total cost.

How is the interest rate set?

Pricing reflects loan-to-value, the security type, your exit strategy, and how quickly the lender needs the funds deployed. Cleaner exits and lower LTVs typically attract sharper rates.

Will I know the full cost before I commit?

Yes — a proper broker will set out a full illustration covering interest, arrangement fee, valuation, legal costs and any exit fee before you proceed, so there are no surprises at completion.

Get a clear bridging cost breakdown

Call 0345 2690628 for a full illustration before you commit to any lender.

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