Buying a Home
Remortgaging
Landlord
Specialist
Secured Loans
Debt Consolidation
Conveyancing
Finding a Solicitor
Bridging Loans
Bridging loan costs are made up of interest plus several one-off fees, not a single quoted rate. This guide breaks down every cost component, with a worked example, so you can judge the total cost of borrowing before you enquire.
The total cost of a bridging loan is made up of several separate charges, not a single quoted rate. You'll typically pay monthly interest for as long as the loan is outstanding, plus one-off fees including an arrangement fee, a valuation fee, legal costs (often for both you and the lender), and sometimes a broker fee and an exit fee.
Because bridging finance is priced individually by each lender, the only way to see an accurate figure for your circumstances is to speak to an advisor for a personalised breakdown.
Bridging loan costs are made up of more than just an interest rate. Alongside monthly interest, you'll usually pay a handful of one-off fees for arranging, valuing and legally processing the loan, and sometimes a further fee when you repay it. Understanding each component before you apply means you can judge the true total cost of borrowing rather than being caught out later.
If you want to compare these against the fees charged on a different secured product, our guide to secured loan fees explained breaks down the equivalent charges for that option.
Bridging loans used to buy or fund work on a property you or a close family member will live in are regulated by the Financial Conduct Authority. Commercial and pure investment bridging loans may fall outside this regulation, which is worth checking before you commit - you can search any firm's permissions on the Financial Conduct Authority register.
Bridging loan interest is charged in one of three main ways, and the method you choose affects your month-to-month cash flow rather than necessarily the total amount you'll repay.
Interest is added to the loan balance each month and compounds until you repay. You make no monthly payments, which suits borrowers who need every penny of cash flow free during the loan term, such as those funding a refurbishment before selling.
Interest for the agreed term is calculated upfront and deducted from the loan advance, so you receive slightly less than the full loan amount but make no ongoing payments. This suits borrowers who have a reasonably clear idea of how long they'll need the loan for.
You pay interest monthly, in a similar way to a standard mortgage. This usually keeps the overall cost lower, because interest isn't compounding, but it does mean you need enough spare income to cover the payments each month.
The exact figure for any of these methods depends on the lender, the loan-to-value and your circumstances, so it's worth speaking to an advisor about which structure suits your situation rather than relying on a headline figure. For a broader comparison of how interest cost translates into an annual figure, see how APR is calculated on a secured loan.
The figures below are for illustration only, to show how the same cost components scale with loan size and term. Your own figures will depend on the lender, your loan-to-value and your circumstances, so always ask an advisor for a personalised, up-to-date breakdown before comparing options.
Both scenarios use the same six one-off cost components, but the totals scale with loan size, and the interest line is left blank deliberately - it depends on your circumstances and shouldn't be estimated from a generic figure. Remember that bridging loans are secured against property, so your home or other property is at risk if the loan isn't repaid or refinanced by the end of the term.
Get your own figures
These examples are for illustration only. An advisor can talk you through what your bridging loan would actually cost, based on your loan size, term and exit strategy.
There's no single figure that applies to every bridging loan. A handful of factors determine where you'll sit within a lender's pricing, and being aware of them before you apply can help you put together a stronger case. Bridging finance is often used to cover the gap when buying before you sell and breaking a chain, so it's worth weighing these costs against the true costs of moving home more generally.
What affects your costs
Loan-to-value
The lower your loan is relative to the property's value, the less risk the lender is taking on, which typically works in your favour on cost.
Exit strategy
A clear, credible plan for repaying the loan, such as an agreed sale or a remortgage offer, reassures lenders and can affect the terms you're offered.
Property type and condition
Unusual construction, properties in poor repair, or those without planning permission can all affect a lender's pricing and appetite.
Loan term
Longer terms mean more interest accrues overall, even if the monthly cost feels manageable, so it pays to keep the term realistic.
Credit profile and complexity
Bridging lenders focus more on the property and exit strategy than credit score, but a more complex case can still affect the fees and terms available.
Yes - alongside interest, most bridging loans carry several smaller fees that are easy to miss when you're focused on the headline cost. None of these are hidden in the sense of being concealed, but they're often mentioned only in the small print of an offer letter, so it's worth checking for them specifically before you sign anything.
Ask your advisor or lender for a full list of every fee that could apply to your loan, not just the headline arrangement fee and interest.
There's no way to make a bridging loan cheap, but there are genuine ways to bring the total cost down. Comparing the best bridging loan companies compared rather than approaching a single lender is usually the single biggest lever, because pricing and fee structures vary considerably across the specialist bridging market.
Borrowers who approach one lender directly often accept the first offer because they don't have anything to compare it against. Comparing fee structures across several specialist lenders, rather than just the headline monthly cost, is usually where the real savings are found.
Reduce your costs
It depends on your situation. Bridging finance can be worth the extra cost when speed and flexibility genuinely matter, such as breaking a chain, buying at auction against a tight deadline, or funding a refurbishment before a sale completes. In those situations, the cost of borrowing can be outweighed by the deal you'd otherwise lose.
If you're not in a time-critical position, a cheaper alternative such as a secured loan, remortgaging to release equity, or a further advance from your existing mortgage lender may suit you better. Our comparison of a secured loan vs bridging loan walks through the trade-offs in more detail.
MoneySavingExpert, the consumer site founded by Martin Lewis, describes bridging loans as comparatively expensive next to a standard mortgage or secured loan, and recommends comparing your options carefully and using one only when you genuinely need to borrow quickly. We'd echo that view: get advice before committing, and remember that your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
If you're weighing this up and want independent guidance rather than advice tied to a specific product, MoneyHelper (0800 138 7777) can help you think through your options.
Common questions
The main drawback is cost: bridging loans carry higher interest than a standard mortgage or secured loan, plus several one-off fees. Terms are also short, typically 1 to 24 months, so you need a realistic exit strategy. If your exit is delayed, you risk extension fees or, in the worst case, losing the secured property.
MoneySavingExpert, the consumer site founded by Martin Lewis, describes bridging loans as comparatively expensive next to a standard mortgage or secured loan, and recommends comparing your options carefully and using one only when you genuinely need to borrow quickly. We'd echo that: get advice before committing.
Yes. Alongside interest, most bridging loans carry an arrangement fee, a valuation fee, and legal fees for both you and the lender. Some also charge a broker fee, an exit fee, or an administration fee. Ask for a full breakdown of every fee before you commit, not just the interest figure.
It depends on your situation. Bridging finance can be worth the extra cost when speed matters, such as breaking a chain, buying at auction, or funding a refurbishment before selling. If you're not in a time-critical position, a secured loan, remortgage, or further advance is usually cheaper and worth comparing first.
Interest is usually charged monthly and can be handled in one of three ways: rolled up and added to the balance until you repay, retained and deducted from the loan upfront, or serviced with monthly payments like a standard mortgage. The exact figure depends on the lender, loan-to-value, and term.
Often, yes. Many lenders allow the arrangement fee and other charges to be added to the loan rather than paid upfront, but this means you pay interest on those fees for the whole term, increasing the total cost. Paying fees upfront, if you can afford to, is usually the cheaper option overall.
What our clients say
Shortly after I spoke with Anna, she was also very helpful and made it effortless and a nice experience.
Had a really good experience regarding arranging a secured loan. They introduced me to a great advisor. Thanks for the help.
For once a loan transaction without stress and complications. Very impressed and highly recommended.
Thrilled to share my exceptional experience with Money Saving Advisors. The website made it incredibly simple and easy to connect with an advisor. They helped me find the best deal on my remortgage and secured a very competitive interest rate!
Great advice and money saved on mortgage.
I have previously declined a loan of the value I needed from various brokers, but this website found me a reputable broker with surprisingly decent rates.
