A bridging loan has three main costs: monthly interest, an arrangement fee, and an exit fee — plus valuation and legal costs. This page sets out real numbers, including a full worked example, so you can price a bridge before you speak to anyone. We are a direct lender; these are the charges we actually apply.
Bridging loan interest rates
Bridging interest is quoted per month, not per year. Our rates start from 0.79% per month. Three things move the rate: loan-to-value (borrowing 50% of the property’s value prices better than 70%), the security (a lettable residential investment prices better than a vacant commercial unit), and the exit (a signed sale contract is stronger than “we plan to refinance”). Anyone quoting a single rate without asking about these is not quoting seriously.
The fees
- Arrangement fee — typically 2% of the loan, usually deducted from the advance.
- Exit fee — typically 1%, paid when the loan redeems.
- Valuation fee — at cost, set by the surveyor and the property, not marked up.
- Legal fees — you pay both sides’ solicitors, as with any secured loan.
- What you should not see — admin fees, fund management fees, or charges invented after the offer. If a quote has them, ask why.
How the interest is paid
Most borrowers retain the interest: it is deducted from the advance up front, so there is nothing to pay during the term — useful when the point of the bridge is that cash is tied up. If you have income, you can service it monthly or quarterly instead and borrow more of the gross. We will structure whichever fits the deal.
A full worked example
| Loan (gross) | £500,000 |
| Term | 12 months |
| Interest at 0.79% per month, retained | £3,950 × 12 = £47,400 |
| Arrangement fee (2%) | £10,000 |
| Exit fee (1%), paid at redemption | £5,000 |
| Valuation and legal fees | At cost — depends on the property |
| Total cost of borrowing (excl. valuation/legals) | £62,400 |
| Day-one net advance (interest & arrangement fee retained) | £442,600 |
Redeem in month 8 instead of month 12 and unused retained interest is rebated, so the real cost falls.
What makes a bridge cheaper
- Borrow at lower LTV if you can — it is the biggest single lever on rate.
- Have the exit evidenced before you apply: sale agreed, refinance decision in principle, or a dated liquidity event.
- Redeem early — with retained interest, unused months come back to you.
- Go direct. A broker layer typically adds 1–2% to the cost of the same loan. (Brokers who work with us — fees respected.)
Frequently asked questions
How much does a bridging loan cost?
Expect three main costs: monthly interest (from 0.79% per month with us), an arrangement fee (typically 2% of the loan) and an exit fee (typically 1%), plus valuation and legal costs at cost. On a £500,000 loan over 12 months that totals around £62,400 before valuation and legals.
What are bridging loan interest rates in 2026?
Bridging rates are quoted monthly, not annually. Our rates start from 0.79% per month; what you pay depends on loan-to-value, the property type and the strength of your exit.
Do I pay bridging loan interest monthly?
Not necessarily. Interest can be retained (deducted from the advance so there is nothing to pay during the term), serviced (paid periodically), or a combination. Most borrowers choose retained interest.
Are there hidden fees on bridging loans?
There should not be. A reputable lender sets out interest, arrangement fee, exit fee, valuation and legal costs in the offer. Watch for admin fees, fund-management fees and steep default rates in the small print — and ask any lender what happens to the rate if you run past term.
Is a bridging loan cheaper through a broker?
A broker adds a fee (often 1–2%) on top of the lender’s charges. Going direct to a lender removes that layer — we are a direct lender, so the terms you see are the terms you get.
Price your own deal
The loan calculator gives an indicative cost in under a minute, or send the deal itself and we will quote actual terms the same day.