Bridging Loan Calculator — The Real Cost, Not Just the Rate

A bridging loan is short-term, interest-only finance secured against property, typically used to "bridge" a gap — buying a new property before selling an existing one, purchasing at auction with a tight completion deadline, or funding a refurbishment before refinancing onto a standard mortgage. Terms usually run from 1 to 24 months, and unlike a standard mortgage, bridging interest is quoted monthly, not annually, reflecting the genuinely short-term nature of the product.

Most UK lenders cap residential bridging at around 75% loan-to-value, with lower LTVs consistently accessing more competitive rates. The market average sat close to 0.72% a month through early 2026.

On a £500,000 facility over 12 months at standard rates, the difference between rolled-up and serviced interest typically runs to roughly £3,000 to £5,000 — a genuinely material gap worth understanding before choosing between the two structures.

This is worth being genuinely precise about, because it catches a lot of people out. A 0.85% monthly rate doesn't simply cost 10.2% a year (0.85% × 12) if the interest is rolled up. Because each month's interest compounds onto an already-larger balance, the true effective annual rate comes out closer to 10.7% — a genuinely meaningful difference once you're comparing a £500,000 or larger facility.

Arrangement fee: typically 1% to 2.5% of the loan, usually deducted from the advance rather than paid upfront, meaning you receive slightly less than the gross loan amount at completion. Exit fee: 0% to 1%, not universally charged, but worth checking specifically since it applies on redemption. Legal and valuation costs: rarely come in under £1,500 to £2,500 combined, covering both your own and the lender's legal representation.

A borrower comparing purely on headline monthly rate can genuinely end up worse off than one who looked at the total cost — a 0.75% deal with high fees can cost more over a short term than a 0.85% deal with lower fees, particularly on shorter bridges where fixed fees make up a larger share of the total cost.

Bridging finance is fundamentally short-term, and every lender wants a clear, credible exit strategy before approving a loan — refinancing onto a standard buy-to-let or residential mortgage, selling the property (potentially after a refurbishment), or repaying from another asset or expected proceeds. Weak or vague exit planning is consistently one of the most common reasons bridging applications stall or get declined, regardless of how strong the rest of the case looks.

A £300,000 loan, 0.75% monthly rate, 9-month term, rolled-up interest, 2% arrangement fee, no exit fee, £2,000 legal and valuation costs. Total rolled-up interest over 9 months comes to roughly £20,700, reflecting monthly compounding. Arrangement fee: £6,000. Total cost of borrowing: interest plus fees, roughly £28,700. Net advance received at completion, after the arrangement fee is deducted: roughly £294,000.

The effective annual rate works out to approximately 9.4% — noticeably higher than the 9.0% you'd get from simply multiplying 0.75% by 12, purely because of monthly compounding on the rolled-up balance.

Official sources & further reading: read general short-term finance guidance at MoneyHelper, and verify any lender or broker on the FCA register. Compare against a standard remortgage with our remortgage calculator, or browse every tool on the mortgage calculators homepage.