What a bridging loan actually costs.
Every line of the fee stack, what drives each one, and three worked examples with real figures. Most brokers will quote you a monthly rate and let you discover the rest later. This page is the version we would want if we were borrowing.
By Dominic Whitecross, Co-Founder, HyLend. Last reviewed July 2026.
The short answer
On a typical first charge residential bridge held for 12 months, the total cost of borrowing usually lands between 10% and 14% of the loan. On a £500,000 bridge that is roughly £50,000 to £70,000 all in, covering interest, the lender's arrangement fee, valuation and legal costs on both sides.
That is the honest range. Anyone quoting you a single number without knowing your asset, your leverage, your term and your exit is guessing, and the same is true of any calculator that asks for your email before it shows you a figure.
The one thing to understand before anything else
Bridging rates are quoted monthly, not annually. A rate of 0.69% per month is roughly 8.28% per year before compounding. It is not 0.69% per year, and it is not comparable to a mortgage rate until you convert it. This single point is responsible for more misunderstanding than every fee on this page combined, and it works in both directions: some borrowers panic at a rate that is reasonable, others fail to notice a rate that is not.
The full cost stack, line by line
| Cost line | Typical range | Paid when |
|---|---|---|
| Monthly interest | from 0.69% pm | Retained, serviced or rolled up |
| Lender arrangement fee | around 2% of gross loan | On completion, usually added to the loan |
| Valuation | £500 to £3,000+ | Up front, before the report is produced |
| Lender's legal costs | £1,500 to £5,000+ | On completion, sometimes an undertaking up front |
| Your own legal costs | Separate, quoted by your solicitor | On completion |
| Exit or redemption fee | £0 to 1% of the loan | On redemption, where it applies |
| Telegraphic transfer fee | £25 to £50 | On drawdown and on redemption |
| Broker fee | Disclosed before you proceed | Varies by broker and model |
Indicative ranges based on current whole of market pricing, July 2026. Second charge, land and commercial assets price above these ranges.
What actually drives your rate
Loan to value. The strongest single lever. A 55% LTV deal prices materially better than a 75% one on identical security, and dropping your leverage is often the cheapest change you can make to a quote.
Charge position. First charge is standard pricing. A second charge sits behind existing debt and prices accordingly, because the lender's recovery position is weaker.
Asset type. Residential and semi commercial attract the best pricing. Commercial, specialist trading assets and land price higher, with land without planning the highest of all.
The exit. A sale already under offer is a stronger exit than a refinance that assumes a valuation uplift. Lenders price the difference.
The borrower. Adverse credit is not automatically fatal on a retained bridge, but undisclosed adverse discovered at underwriting costs both time and pricing.
Term. Longer terms tie up the lender's capital and can carry a small premium, but the bigger effect is on retained interest, which reduces your day one advance.
Retained, serviced or rolled up
How the interest is handled changes what you receive on day one, not usually the headline rate. It is the structural decision that most affects how a bridge feels to hold.
Retained. Interest for the full term is deducted from the advance up front. You make no monthly payments and the lender assesses the asset and the exit rather than your income. The trade off is a smaller day one advance, so the gross loan has to be bigger to deliver the same net funds. This is the default in bridging and suits most scenarios.
Serviced. You pay interest monthly and receive a larger day one advance, but you must evidence the income to cover the payments. Works well where there is rental income or trading profit covering the cost.
Rolled up. Interest accrues and is settled in full at redemption. No monthly payments and no reduction to the day one advance, but the redemption figure is larger and compounding can apply. Check whether it is simple or compound, because on a longer term the difference is real.
Gross versus net, the distinction that catches people out
The gross loan is the total facility the lender writes. The net advance is what actually reaches your account after retained interest and any deducted fees. On a retained interest bridge these are very different numbers, and the LTV is calculated on the gross figure.
If you need £500,000 in your account, you need to be asking for a net advance of £500,000, not a gross loan of £500,000: model gross and net side by side →
Three worked examples
Indicative structures at current market pricing. Your figures will differ; the calculator gives you yours exactly.
Example one: £250,000 chain break, 6 months
A £700,000 house purchase where the existing home has not yet sold. Bridge secured on the existing property, exit by sale.
- Gross loan £250,000 against a £700,000 asset, comfortably low leverage, so pricing sits at the better end.
- Interest retained for 6 months, arrangement fee of around 2% added to the loan.
- Valuation and legal costs paid separately.
- Redeemed in month four when the sale completes, with unused whole months of retained interest refunded subject to any minimum term.
The relevant comparison is not against a mortgage rate. It is against losing the purchase, or accepting a lower offer on the existing house to force a quick sale. Both of those usually cost more than the bridge.
Example two: £500,000 refurbishment, 12 months
Buy at £650,000, spend on refurbishment, refinance onto a buy to let facility against the improved value.
- Gross loan £500,000, roughly 77% of purchase price, so likely structured with the works funded in stages or partly from cash.
- Interest retained across 12 months, arrangement fee around 2%, valuation and legals on top.
- All in cost of borrowing in the region of 10% to 14% of the loan.
- Exit by refinance, which means the take out lender's appetite at the post works value is the critical assumption.
Here the cost is justified only by the uplift. If the finished value does not support the refinance at the leverage you assumed, the exit fails and the bridge has to be extended at further cost. That assumption deserves more scrutiny than the interest rate does.
Example three: £1m commercial capital raise, 9 months
Releasing equity from an owned commercial asset to fund an acquisition, exit by term refinance.
- Commercial security prices above residential and usually at lower maximum leverage.
- Valuation costs are materially higher on commercial property and the report takes longer.
- Legal costs rise with tenancy complexity, so a multi let asset costs more to document than a single let one.
- Exit by term facility, which should be progressed in parallel from day one rather than started at month six.
On larger commercial deals the fee lines that vary most are valuation and legals, not the rate. It is worth getting both quoted early, because they are frequently underestimated at the enquiry stage.
The costs that surprise people
Minimum interest periods. Many bridges carry a minimum term of one to three months. Redeem inside it and you pay the full minimum regardless. On a genuinely short bridge this can dominate the economics, and it is rarely volunteered.
Both sides' legal costs. You pay your own solicitor and the lender's. Two bills, and the lender's is often the larger.
Extension fees. If the exit slips past term, extending is not automatic and is not free. Expect a fee and possibly a repriced rate. Building a contingency into the term at the outset is nearly always cheaper than extending later.
Default interest. The rate that applies if the loan runs past term without an agreed extension. It is materially higher than the headline rate and it is the number worth reading most carefully in the offer.
Exit fees on a percentage basis. Where an exit fee is charged as a percentage of the loan rather than a flat sum, it scales with facility size and can be a significant line on a larger deal.
Non refundable valuation. Paid up front and not returned if the valuation comes in low and the deal does not proceed. This is the one genuine sunk cost in the process.
None of these are unreasonable in themselves. The problem is only ever discovering them late, which is why we put the whole stack in front of you before you apply.
How to reduce what you pay
- Lower the leverage. The most effective lever available. Even a small reduction in LTV can move you into a better pricing band.
- Strengthen the exit. A sale under offer or a term facility with an agreement in principle changes how a lender prices the risk.
- Take the term you actually need, with contingency. Too short and you pay to extend. Too long and retained interest reduces your advance unnecessarily.
- Instruct solicitors on day one. This does not reduce the rate, but it reduces the number of months you hold the facility, which is the same thing in cash terms.
- Disclose everything up front. Adverse credit or a title issue found at underwriting costs far more in time and repricing than the same fact disclosed at enquiry.
- Test the whole market, not one panel. On identical security, pricing across lenders varies more than most borrowers expect.
The valuation line, and how to spend less on it
The valuation fee is the one cost on this page you pay before you know whether the deal works, and it is not refunded if the case aborts. That makes the valuation route worth choosing deliberately rather than accepting.
An automated valuation is often absorbed by the lender at no cost to you and returns in minutes. A desktop report from a RICS valuer costs a fraction of a physical inspection and turns around in 24 to 72 hours. Both are now accepted by leading bridging lenders on standard residential security up to around 75% loan to value. Desktop and AVM valuations →
Two further points that save money. Where a deal has to move lender late, an existing report can often be re addressed to the new lender for a fee rather than starting again. And on commercial security, check what basis of value the lender applies before paying, because a restricted marketing period figure can reduce the advance by more than any rate saving is worth. The full valuations guide →
Does moving faster cost more?
Speed is rarely priced as a separate line, but the routes that deliver it narrow the lender pool, and a narrower pool is generally a less competitive one. The larger cost of a rushed deal is abortive rather than contractual: valuation fees are paid up front and are not refunded, and solicitors charge for work done to the point of abort.
That is the argument for testing whether a deadline is achievable before instructing anybody. Check whether your deadline is realistic →
Bridging cost FAQs
How much does a bridging loan cost?
On a typical first charge residential bridge the all in cost of borrowing usually lands between 10% and 14% of the loan over a 12 month term. That is made up of monthly interest from 0.69% per month, a lender arrangement fee of around 2% of the gross loan, valuation of £500 to £3,000 or more, legal costs of £1,500 to £5,000 or more covering both sides, and in some cases an exit or administration fee of up to 1%.
Are bridging loan rates monthly or annual?
Bridging rates are quoted monthly, which is the single biggest source of confusion when comparing them to mortgages. A rate of 0.69% per month is roughly 8.28% per year before compounding, not 0.69% per year. When you see a bridging rate next to a mortgage rate, one of them has to be converted before the comparison means anything.
What is the difference between retained and serviced interest?
Retained interest is deducted from the loan up front, so you make no monthly payments but receive a smaller day one advance. Serviced interest is paid monthly, giving you a larger advance but requiring provable income to cover the payments. Rolled up interest accrues and is settled at redemption. Retained is the most common structure in bridging because affordability is then assessed on the asset and the exit rather than your income.
Do I get a refund if I repay a bridging loan early?
Usually yes on a retained interest facility, but only for whole unused months and only after any minimum term has passed. Many bridging loans carry a minimum interest period of one to three months, so redeeming inside that window does not save you anything. The refund position and the minimum term should be confirmed in writing before you proceed, because they vary materially between lenders.
What fees do brokers charge on bridging loans?
Practice varies across the market. Some brokers charge the borrower a fee, some are paid commission by the lender, and some do both. We will receive commissions that vary depending on the lender, product and other permissible factors, and the nature of any commission model is confirmed to you in writing before you proceed. What matters is that you see the whole cost stack, including whatever the broker earns, before you commit.
Why is my bridging quote higher than the advertised rate?
Advertised headline rates are the best case: first charge, low loan to value, straightforward residential security, strong exit and a clean borrower. Pricing rises with leverage, with second charges, with commercial or land security, with complex title, with adverse credit and with a weaker or slower exit. A quote materially above the headline usually means one of those factors is present, and the useful question is which one and whether it can be addressed.
Is a bridging loan cheaper than a commercial mortgage?
No, and it is not meant to be. Bridging is priced for speed and certainty over a short term. If your timeline is comfortably three months or more and your income supports the borrowing, a term facility will almost always be cheaper. A bridge is worth its cost only when the deal it enables generates more than the finance costs, such as an auction discount, a refurbishment uplift or a purchase that would otherwise be lost.
Are there costs if the deal does not complete?
Yes. Valuation fees are paid up front and are not refunded, and solicitors may charge for work done to the point of abort. This is why testing the deal properly before instructing anyone matters.