Bridging Loan Cost Calculator

Bridging finance is quoted as a monthly rate, which makes it look far cheaper than it is. Under one percent a month sounds modest and is over twelve percent a year before any fee, and the fees on a short facility frequently add several percent more.

It can still be the right product — for a purchase that cannot wait, a property no mainstream lender will touch, or a chain that would otherwise collapse. The point is to price it honestly against what it makes possible.

The calculation

Interest = amount × monthly rate × months. Fees are the arrangement and exit percentages on the amount, plus legal and valuation costs. The equivalent annual cost annualises the total so it can be compared with an ordinary mortgage rate.

Worked example

Borrowing 200,000 at 0.85% a month for nine months costs 15,300 in interest. A 2% arrangement fee is 4,000, a 1% exit fee 2,000, and legal and valuation 2,500 — total fees of 8,500. The whole facility costs 23,800, which annualises to about 15.9%, well above the monthly rate suggests.

The exit is the risk, not the rate

Bridging is priced on the assumption that it is repaid on time from a defined source — a sale, a refinance, a completion. If that exit slips, extension fees and default rates apply and the cost escalates quickly. Never take bridging without a specific, evidenced exit.

Frequently asked questions