How much does a bridging loan cost?

The cost components of a bridge

The cost of a bridging loan is not one number but a stack of them. Bridging loans are priced from a monthly interest rate plus a set of fees, and most borrowers focus on the headline rate, yet the fees around it can add as much again to the total, especially on a short loan where a one-off fee is spread over only a few months. Understanding each component is the key to knowing what bridging loans really cost and where the total can be trimmed.

• Interest: charged monthly on the balance, the largest cost on most loans.
• Arrangement fees: a percentage of the loan, usually added to the advance rather than paid upfront.
• Valuation fees: paid to the surveyor who values the property as security.
• Legal fees: the borrower typically covers both their own and the lender's legal costs.
• Broker fees: charged by some brokers for arranging the loan.
• Exit fees: charged by some lenders when the loan is repaid, though many charge none.

The interest and the arrangement fee are the two that dominate the total, so the sections below give each its own treatment before working a full example.

Rolled, retained and serviced interest

How the interest is paid changes the cash a bridge demands month to month, even though the rate is the same. There are three approaches, and lenders often combine them as a deal progresses. Which one fits depends on whether the property produces any income while the loan is running.

Rolled and retained interest keep monthly cash outgoings at nil, which suits an empty or part-let asset, but they raise the amount owed at the end because interest compounds on a rising balance or ties up part of the advance. Serviced interest keeps the balance flat and is cheaper overall, but it needs income to pay it. On a stabilisation bridge the interest is often rolled or retained early, then part-serviced as the asset lets up.

A worked example on a 200,000 pound bridge

The clearest way to see the total is to run the numbers. Take a 200,000 pound bridge at an indicative 0.95 percent a month, held for six months, with a 2 percent arrangement fee and interest rolled up to the exit. These are illustrative figures, not an offer of credit.

So a 200,000 pound bridge held for six months costs in the region of 16,000 to 18,000 pounds all in, with the interest of roughly 11,400 pounds the largest single element and the arrangement fee of 4,000 pounds the next. Halve the term to three months and the interest halves to about 5,700 pounds, while the fees stay the same, which is why the length of the loan is the biggest lever on the total. You can run your own figures through our bridging loan calculator at /calculators/bridge-cost/.

What moves your bridging loan rate

The 0.95 percent anchor is a midpoint, and the market commonly quotes bridging loan rates between 0.55 and 1.25 percent a month. Where a given deal sits within that band is driven by a handful of factors that a lender prices for risk, so two bridging loans on paper-identical terms can carry very different interest rates. The stronger and cleaner the deal, the closer to the bottom of the band the rate tends to sit.

• Loan to value: lower leverage against the property's value earns a keener rate.
• The asset: standard commercial and residential investment stock prices better than specialist property.
• The exit: a contracted, closed exit such as an agreed sale is cheaper than an open, planned one.
• Charge order: a first charge prices below a second charge, which sits behind existing debt.
• Experience: a borrower with a track record on similar deals is a lower risk to the lender.

None of these move the rate on their own; a lender weighs them together. A well-leveraged first-charge loan on a lettable asset with a contracted sale will price very differently from a highly geared second charge on a specialist building with an open exit, even at the same headline term.

Fees beyond the interest

Valuation fees scale with the property's value and are paid to the surveyor the lender instructs. Legal fees usually cover both the lender's and the borrower's solicitors, both settled by the borrower. Broker fees, where charged, are for arranging the facility. Exit fees, charged by some lenders when the loan repays, are worth checking for at the outset because they are easy to miss in a headline rate. The market that funds all of this is deep: the BDLA put the UK bridging and development loan book at a record 13.7 billion pounds as at Q3 2025, up 51.6 percent year on year.

Closed and open bridging, and what each costs

Whether a bridge is closed or open changes what it costs, because the lender is pricing certainty. A closed bridging loan has a fixed, contracted exit date, such as a sale that has exchanged with a completion date set, so the lender knows exactly when the money comes back. An open bridge has a planned but not yet contracted exit, which leaves the repayment date less certain and carries a small premium for that risk.

• Closed bridging loans: a contracted exit and a known repayment date, priced at the lower end of the rate band.
• Open bridging loans: a planned exit without a fixed date, priced a little higher for the timing risk.

In practice most bridges start life somewhere between the two, with a clear plan but no signed contract, and firm up towards a closed position as the exit is arranged. The nearer a loan gets to a contracted exit before completion, the better it tends to price. This is one more reason arranging the exit early pays for itself: it moves the loan towards the cheaper, closed end of the range and reduces the chance of an extension.

How to keep the total cost down

Almost every lever on the cost of bridging finance comes back to two things: how long the loan runs and how certain the exit is. Interest accrues by the month, so a shorter loan is a cheaper loan, and a clean, credible exit earns a lower rate and a smoother extension if one is ever needed. The practical steps below follow from that.

1. Keep the term as short as the plan realistically allows, since interest is the largest cost.
2. Line up the exit before you draw, whether a refinance or a sale, so the loan repays on time.
3. Borrow at a sensible loan to value, because lower leverage earns a keener rate.
4. Service the interest from any income the asset produces rather than rolling it all up.
5. Compare the total cost, fees included, not just the monthly rate.

Where the exit is a refinance onto longer-term debt, arranging it in advance is the single biggest saving, because it removes the risk of the bridge running past its term. Our bridge-to-term route sits at /services/bridge-to-term-finance/, and what happens as a bridge reaches its end is covered at /blog/what-happens-when-a-bridging-loan-ends/.

Cost versus a forced sale

Bridging finance is expensive measured against a mortgage, but that is the wrong comparison. The right one is against what happens without it: a forced sale, a lapsed auction deposit, a stalled refurbishment, or a development loan running to a hard maturity. Set against those, the few thousand pounds a month a bridge costs is often small next to the value it protects or creates.

On a completed but part-let scheme, for instance, a bridge held across the income ramp lets the asset reach a stabilised income and refinance at investment rates, rather than being sold half-let at a discount. That trade, cost against value preserved, is the real test of whether a bridge is worth it. This lending is unregulated commercial debt for businesses and investors; a bridge secured on a borrower's own home is a regulated mortgage contract overseen by the Financial Conduct Authority, and where a transaction would require FCA authorisation we refer it to a regulated firm. We are an arranger and introducer, not a lender.

For the full picture of how commercial bridging fits alongside development, auction and refurbishment finance, see the pillar guide at /blog/bridging-loans-for-commercial-and-investment-property/, and for costing a refurbishment bridge specifically, /blog/refurbishment-bridging-loans/. We arrange these facilities across the UK; local market data sits at /locations/.