Bridging loan costs and fees explained

Last reviewed: 4 October 2026

BridgingLoans.online is an independent UK introducer operated by PASECOM GROUP LTD (company 17139327, ICO ZC117546). We do not lend and we do not advise. Nothing on this page is a quote, an MCOB illustration or an offer of credit.

What makes up the total cost of a bridging loan?

A bridging loan has two layers of cost. The first is what the lender charges: monthly interest, an arrangement (facility) fee and sometimes an exit fee or extension charge. The second is what other people charge to get the loan completed: the valuer, your solicitor, the lender’s solicitor and, if you use one, a broker. Only the first layer usually sits inside the gross loan. The second is normally paid in cash, before or at completion.

A keen rate with an exit fee and heavy legal costs can end up dearer than a slightly higher rate with no exit fee. The only reliable comparison is the total you will repay plus the cash you will spend getting there.

Which charges come from the lender?

Monthly interest

Bridging is priced per month, not per year. Interest can be retained (worked out for the whole term and added to the loan on day one), serviced (paid monthly from your own funds) or rolled up (added month by month, sometimes compounding). Retained and rolled-up interest increase the gross loan; serviced interest does not, but you need evidence you can meet the payments. The arithmetic for all three, side by side, is in retained vs serviced vs rolled-up interest.

Arrangement or facility fee

Public market guides commonly show arrangement fees of about 1–2% of the loan. The fee is often added to the facility rather than paid up front. When it is added before interest is worked out — as in this site’s calculator — you pay interest on the fee as well as on the cash you receive. Some lenders calculate the fee on the gross loan instead of the net, which makes it larger. Ask which basis applies.

Exit fee

Exit fees are less common than they once were, and many lenders charge none. Where one applies it is usually a percentage of the loan or of the amount repaid, taken at redemption. It is easy to miss because it never appears in the monthly figure. Read the illustration or offer for it explicitly.

Extensions, minimum interest and default

If your exit slips, interest keeps running. An extension is not a right: if a lender agrees one it may charge a further fee and reprice the loan. Many retained-interest loans rebate unused months if you repay early, but often only after a minimum interest period. Default interest after the term ends can be considerably higher than the contract rate. These are the costs that turn a sensible bridge into an expensive one.

Which costs are paid to third parties?

• Valuation. A RICS valuation is instructed by the lender and paid by you. Price depends on the property type, value and complexity; a standard house costs far less than a mixed-use block or a development site.
• Your solicitor. You pay your own solicitor to deal with title, searches and the loan documents.
• The lender’s solicitor. You normally pay the lender’s legal costs too.
• Broker fee. Brokers may charge a flat fee or a percentage, or be paid by the lender, or both. Confirm the basis in writing before you instruct.

What do typical fees and rates look like in October 2026?

Guidance only. Not our rates. Not a quote. We do not lend, so we do not set or offer rates. The bands below summarise dated public material so you can choose a sensible input for the calculator.

As at 4 October 2026. Bank of England Bank Rate was 3.75% in late September 2026. Bank Rate affects lenders’ funding costs, but bridging is priced mainly on the security, the LTV and the exit rather than moving point for point with it.

Worked example: what does a £250,000 bridge cost?

This uses the same inputs and method as the bridging loan calculator: a £500,000 property, £250,000 of net funds, a 12-month term, 0.85% a month retained and a 2% arrangement fee added to the loan.

Indicative educational example using this site’s calculator method: fee = net × 2%; interest = (net + fee) × 0.85% × months; gross = net + fee + interest. The 0.85% a month and 2% fee are teaching defaults, not our rates and not a quote. Valuation, legal and broker costs are not included.

Three things stand out. First, the arrangement fee is added before interest is worked out, so you pay interest on the £5,000 fee as well as on the cash. Second, the lender is securing £281,010, not £250,000, so the gross LTV of 56.2% — not the 50.0% net LTV — is the number most lenders underwrite. Third, the £31,010 cost of credit leaves out valuation, both sets of legal fees and any broker or exit fee. Add those from your own quotes to see the real cost of the transaction.

Working the other way: if a lender caps the gross loan at 75% of a £500,000 property, the gross limit is £375,000. On the same 12-month retained terms the most you could receive in cash is about £333,600, or roughly two-thirds of the value. For the full step-by-step method read net vs gross bridging loan: how to calculate.

How does the length of the loan change the cost?

On a retained loan, interest is charged for the whole term you agree, so each extra month adds the same block again. On the default example every month adds £2,167.50. A six-month term would carry half the interest of a 12-month term; an 18-month term would carry half as much again. That is why a realistic term matters more than shaving a few basis points off the rate.

A term that is too short is a false saving: if the exit is not ready when the loan ends, you may face an extension fee, repricing or default interest. Rebates on unused retained months, where offered, soften the cost of a buffer — but check the minimum interest period first.

What reduces the cost in practice?

These are general points, not product advice:

• Borrow what you actually need. Every extra pound of net loan carries fee and interest.
• Set a term you can evidence, plus a modest buffer, rather than the maximum available.
• Prepare the exit before you apply. A clear sale or refinance plan can widen the choice of lenders and the terms on offer.
• Compare the whole stack — rate, fee basis, exit fee, legal arrangements and rebate rules — not the headline rate.
• Ask whether serviced interest is possible if you have reliable income. It keeps the gross loan lower, but it is only sensible if the payments are affordable even when the exit runs late.

Speed and exit drive cost as much as rate. An auction purchase with a fixed completion deadline or a weak exit narrows the market; a clean, well-documented case widens it. See exit strategies for bridging finance for what lenders look for.

Is this regulated or unregulated bridging?

If you or a close family member will live in the property as a main home during the facility, the loan is more likely to be a regulated mortgage contract. BridgingLoans.online is an introducer, not an FCA-authorised broker and not a lender. Where occupancy is yes, we pass a complete pack to an FCA-regulated broker, who will explain the protections that apply. We do not recommend a product. Investment, commercial, vacant buy-to-let, land and many company or SPV files are often unregulated — still indicative only, still not advice. Occupancy is a legal dividing line, not a marketing label. See regulated bridging and unregulated bridging.

Next step

Put your own figures into the calculator, add your valuation and legal estimates under optional fees, and compare total repayable. If you want regulated partners to review the case, send an enquiry or email hello@bridgingloans.online.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

Indicative estimate only. Not a quote, illustration under MCOB, or offer of credit. BridgingLoans.online is a trading name of PASECOM GROUP LTD (company 17139327, ICO ZC117546), an introducer, not a lender. Email hello@bridgingloans.online.

Last reviewed: 4 October 2026.