Bridging Loan Cost Calculator
Bridging loans are short-term, high-cost financing instruments used to bridge gaps in property transactions — typically when buying before selling, purchasing at auction, or funding a refurbishment before refinancing. While powerful, they are expensive. This calculator shows the true total cost of a bridging loan, including rolled-up interest, the arrangement fee, and the effective annualised rate.
Why this matters
Many landlords are surprised by the total cost of bridging finance. At 1% per month, a six-month bridge on £200,000 costs £12,000 in interest alone — before fees. These numbers must be built into any deal appraisal.
Key points
- Bridging loan rates typically range from 0.5% to 1.5% per month (6–18% annualised)
- Arrangement fees are typically 1–2% of the loan amount
- Interest can be rolled up (added to the loan) or paid monthly
- Exit fees (0.5–1%) may apply on top of arrangement fees
- The 'all-in cost' should always be calculated before agreeing to a bridge
- Bridging loans must have a clear exit: refinance, sale, or development completion
Frequently asked questions
When should I use a bridging loan?
Common uses include: buying a property at auction (typically 28-day completion required), buying before selling your existing property, purchasing unmortgageable properties for refurbishment, breaking a chain, or funding a short-term development. They should only be used when you have a clear, credible exit.
How quickly can I get a bridging loan?
Bridging loans can complete in as little as 3–7 days in straightforward cases, though 2–4 weeks is more typical. Speed is one of the key advantages over traditional mortgages.
What are the risks of bridging finance?
The primary risk is the exit failing — if you cannot refinance or sell as planned, interest continues to accrue at high rates. Stress-test your exit thoroughly and have a contingency. Always have a Plan B before entering a bridging loan.
Can I get a bridging loan on a buy-to-let?
Yes — bridging loans are widely available for investment properties. Lenders assess the loan against the property value (typically up to 75% LTV) and the credibility of your exit strategy rather than income.