The cost of a bridging loan is more than its headline rate. A typical bridge carries monthly interest — usually retained from the advance rather than paid monthly — plus an arrangement fee, valuation and legal costs, and sometimes an exit fee or a minimum interest period. This guide sets out each cost in turn and shows how they combine.
The costs at a glance
| Cost | Typical shape | Notes |
|---|---|---|
| Monthly interest | Typically from around 0.5% per month; commonly between 0.5% and 1% depending on loan-to-value | Usually retained (rolled up) rather than paid monthly |
| Arrangement fee | Typically 2% of the loan (some lenders 1.5% to 2%) | Usually added to the loan rather than paid up front |
| Valuation fee | Often around £500 to £1,000, rising with property value | Desktop valuations are sometimes available, saving time and cost |
| Legal fees | Around £800–£1,000 for your own; roughly double that covering the lender's too | You usually pay both sides; amounts can often be deducted from the loan |
| Exit fee | Some lenders charge one; many do not | Check the minimum interest period too — commonly three months |
| Broker fee | May apply, depending on the case | We set out the full cost of any facility line by line before you commit |
Last reviewed: June 2026. Figures are typical market shapes, not a quote — the real cost of any bridge depends on the lender, the product, the property and your circumstances.
Interest: retained or serviced
Bridging interest is normally charged on a simple monthly basis over the term, typically from around 0.5% per month and rising with risk and urgency. Most often it is retained: the lender deducts the interest for the whole term from the loan at the outset, so you make no monthly payments and repay one larger balance at the end — which protects your cash flow during a refurbishment or sale. Where interest is serviced, you pay it monthly and receive a higher net advance. Repay early and most lenders rebate the unused retained interest, subject to any minimum interest period.
The arrangement fee
The lender's fee for setting up the facility — typically 2% of the loan amount, with some lenders at 1.5% to 2%. It is usually added to the loan rather than paid from your own cash flow, which is convenient but means it accrues interest and reduces your net advance.
Valuation and legal costs
A valuation fee varies with the value of the property but is often around £500 to £1,000; a large asset undergoing major refurbishment needs a more detailed report and will cost more. On legals, bridging has no free-legals incentives: you will usually pay both your own and the lender's representation. As a planning figure, allow in the region of £800–£1,000 for your own legals, and roughly double that if you are covering the lender's too — amounts that can often be deducted from the loan.
Exit fees and minimum terms
Some lenders charge exit fees; some do not. More common is a minimum interest period built into the loan — commonly three months — so a loan repaid in week two still pays three months' interest. Bridging is pay-for-what-you-use beyond that point. If your project will turn around quickly, tell us at the outset: we will target lenders without minimum terms or exit fees.
What this means for the cash you receive
Because retained interest and the arrangement fee are deducted from the gross loan, the cash that lands on day one — the net advance — is meaningfully smaller than the headline facility. This is the single most common surprise in bridging, and the reason the worked example below matters more than any headline rate.
A worked example
An illustration, not a quote: a £250,000 gross loan at an example 0.85% a month over 12 months works out at roughly £25,500 of interest (this is an illustration, not a rate we are offering). Add an arrangement fee at the typical 2% — £5,000 on this loan — and, with interest retained, the net advance is the gross loan minus the total interest minus the fee: £250,000 − £25,500 − £5,000 = £219,500 received on day one. Valuation (often £500–£1,000) and legal costs (budget around £2,000 covering both sides) sit alongside. Repay after month six and most lenders rebate the unused months' interest, subject to any minimum interest period.
To run the same arithmetic on your own numbers — including working backwards from the net advance you need — use our bridging loan calculator; it estimates interest, fees, net advance and LTV.
Frequently asked questions
Do I make monthly payments on a bridging loan?
Usually not. Interest is most often retained — rolled up and deducted from the loan at the outset — so there are no monthly payments and you repay one larger balance at the end. Serviced (monthly-paid) interest exists on some unregulated loans, but retained is the norm because it protects your cash flow while you work to the exit.
Can the fees be added to the loan?
Mostly, yes. The arrangement fee is usually added to the loan rather than paid up front, and legal costs can often be deducted from the advance. The trade-off is that everything added to the loan accrues interest and reduces the cash you receive on day one.
What happens if I repay a bridging loan early?
Most bridging lenders charge no early repayment penalty and rebate the unused retained interest — for every month you repay early, that month's interest comes back. Some apply a minimum interest period, commonly three months, so always check the specific product. If a fast turnaround is the plan, tell us at the outset and we will target lenders without minimum terms or exit fees.
Will getting a bridging loan quote affect my credit score?
No — initial quotes use a soft search that doesn't affect your credit score. A full application involves the lender's standard checks, and we will tell you before that point is reached.
Talk to an adviser
Send us the property, the loan you need and your planned exit, and we will set out the full cost of the right facility line by line — total cost, not headline rate. Call 020 7126 8574 or request a call back — we aim to reply within one working day.
Your property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. Most bridging loans on investment property are not regulated by the Financial Conduct Authority.
Propertyze is a trading style of City Finance Brokers Ltd, authorised and regulated by the Financial Conduct Authority, FCA No. 766295.
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