Key facts: Bridging interest typically runs 0.5–1.5% per month depending on loan-to-value, property and exit strength. Add an arrangement fee of 1–2%, valuation and legal costs for both sides, and sometimes an exit fee. The number that matters is total cost to exit — not the monthly rate.
The three cost layers
Interest, charged monthly — paid as you go ("serviced") or added to the loan ("rolled up") and settled at exit. Set-up fees: the lender's arrangement fee (1–2% of the loan), a valuation, and legal fees — you typically pay the lender's solicitor as well as your own. Exit costs: some lenders charge an exit or admin fee; always ask, because it changes comparisons between otherwise similar offers.
Worked example 1 — £150,000, 6 months, serviced
Auction purchase, 65% LTV, clean exit by refinance. Interest at 0.85%/month: £1,275 a month, £7,650 over six months. Arrangement fee at 2%: £3,000. Valuation and dual legals: roughly £2,500. Total cost: about £13,150 — approximately 8.8% of the loan for six months' use. Expensive against a mortgage; cheap against losing a £40,000 auction discount.
Worked example 2 — £300,000, 9 months, rolled up
Chain-break, dual security, interest rolled up at 0.75%/month. Rolled interest compounds: the balance grows each month, so nine months costs about £20,900 rather than the £20,250 simple arithmetic suggests. Arrangement at 1.5%: £4,500. Valuations on two properties plus legals: roughly £4,000. Total cost to exit: about £29,400. The rolled structure means nothing is paid monthly — everything settles when the old house sells.
What moves your price
Loan-to-value is the big one — below 60% LTV attracts the keenest rates. A documented exit (agreed sale, refinance decision in principle) reads as low risk and prices accordingly. Property type matters: standard residential beats land or heavy refurbishment projects. And regulated loans (secured on your own home) sit in a different, more protected bracket than unregulated investment lending.
Comparing offers properly
Ask every lender for the same figure: total cost to exit at your realistic term, all fees included — then add a stress test at term plus three months, because exits slip. A cheap monthly rate with a 2% exit fee routinely loses to a plainer offer. A whole-of-market broker will run these comparisons across lenders in one pass. Find a bridging specialist through Nesto — free, no obligation.
Frequently asked questions
What interest rate do bridging loans charge?
Typically 0.5–1.5% per month — roughly 6–18% annualised — driven by LTV, property type and exit strength.
Is rolled-up interest more expensive?
Slightly — it compounds monthly. The benefit is zero monthly outgoings until exit, which suits projects without income.
What fees come with bridging?
Arrangement (1–2%), valuation, both sides' legal costs, and sometimes an exit fee. All belong in your comparison.
Can I repay a bridging loan early?
Usually yes, with interest often charged only to redemption after a minimum period — early exits typically reduce total cost. Confirm minimum-interest terms before signing.