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Bridging Loan Calculator
Calculate the total cost of bridging finance including monthly interest, arrangement fees, exit fees, and all associated costs.
10.2% annual equivalent
Fees
Total Cost of Bridging
£14,150
Monthly Interest
£1,275
Total Interest
£7,650
Total Fees
£6,500
Net Day 1 Funds
£145,000
Cost Breakdown
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Frequently Asked Questions
What is a bridging loan and how does it work?
A bridging loan is short-term secured finance used to bridge a gap — typically between buying a new property and selling another, or between purchasing and refinancing onto a long-term mortgage. They complete in days rather than weeks and are commonly used for auction purchases, uninhabitable properties, or chain breaks.
How much does bridging finance cost?
Bridging loans are charged at a monthly rate, typically 0.65-1.2% per month (8-14% annualised). On top of interest, expect an arrangement fee of 1-2%, possibly an exit fee of 0-1%, valuation fees, and legal costs for both sides. Always calculate the total cost — not just the monthly rate — before committing.
What is the difference between retained and serviced bridging interest?
With retained (rolled-up) interest, the lender adds all projected interest to the loan upfront and you repay it on exit — you don't make monthly payments. With serviced interest, you pay monthly like a mortgage. Retained is more expensive overall but is better for cash flow during a refurbishment period.
What is the maximum LTV on a bridging loan?
Most bridging lenders offer up to 70-75% LTV on residential property, though 65-70% is more common for commercial or development. Some lenders will go to 80% on very strong security. The higher the LTV, the higher the monthly rate will be.
What happens if I cannot repay a bridging loan on time?
Failure to repay on time can trigger default interest rates (often 2-3x the standard monthly rate) and ultimately repossession. Always have a credible, documented exit strategy — either a confirmed sale or a mortgage offer in principle — before taking out a bridge.
Disclaimer: This calculator provides estimates for illustrative purposes only. Results are based on simplified assumptions and should not be relied upon for financial decisions. Actual costs, returns, and outcomes will vary. Always consult a qualified professional before making property or financial decisions.
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What Is Bridging Finance and When Should You Use It?
Bridging loans are short-term, secured finance used to "bridge" a gap — typically between buying a property and either selling another, or refinancing onto a longer-term mortgage. They complete much faster than mortgages (often within 3-14 days) and lend against properties that standard mortgages won't touch: uninhabitable condition, no kitchen or bathroom, structural issues, or auction purchases requiring completion in 28 days.
Bridging is expensive — monthly rates of 0.65-1.2% mean an annualised cost of 8-14%. The justification is that you're buying at a discount (because the property needs work) that far exceeds the finance cost, and you exit via a remortgage or sale once the property is habitable or improved.
Closed vs Open Bridging
A closed bridge has a defined exit date — you've already exchanged on a sale, for example, and just need to bridge 6 weeks to completion. These are cheaper. An open bridge has no fixed exit, which lenders price in with higher rates and shorter maximum terms (usually 12-18 months). Always have a realistic exit strategy — lenders will ask for it.
How Bridging Loan Costs Add Up
The total cost includes: monthly interest (usually rolled up and paid on exit), arrangement fee (1-2% of the loan), exit fee (0-1%), valuation fee, and legal fees for both sides. On a £200,000 loan for 6 months at 0.9%/month with a 2% arrangement fee, total costs exceed £18,000. This calculator shows you the exact breakdown so you can factor it into your deal analysis before committing.
Regulated vs Unregulated Bridging
Bridging on your main home (or a home a close family member will live in) is regulated by the FCA. Bridging on investment property is unregulated — always use a specialist broker and ensure you understand the risks, including what happens if your exit strategy fails.