Free calculator
Bridging loan calculator
What will a bridging loan actually cost? Enter the loan amount, the monthly interest rate from your quote, the term in months and the arrangement and exit fees, and this calculator shows the total interest, the total fees, the full cost of finance and what that comes to as a percentage of the loan.
The trap for newcomers is that bridging is quoted monthly, not annually. A rate of 1% a month sounds small next to a 6% mortgage; over a year it is roughly 12% before a single fee is counted. The rate you enter here is whatever your lender quoted, and this page makes no claim about what the market currently charges.
Bridging loan calculator
A monthly rate multiplied by 12 gives the rough annual equivalent: 1% a month is about 12% a year before fees. With retained interest the whole term's interest, and often the arrangement fee, comes off the advance on day one, so the cash that reaches you is less than the headline loan. Size the loan off the cash you need in hand.
How the calculation works
The interest is simple monthly interest on the full loan for the full term: loan, multiplied by the monthly rate, multiplied by the number of months. That matches how retained interest works, where the lender deducts the whole term's interest from the advance on day one. The fees are the arrangement fee and the exit fee, each taken as a percentage of the loan. Total cost of finance is interest plus fees, and the effective cost is that total divided by the loan.
Because retained interest and, usually, the arrangement fee come off the advance up front, the cash that actually reaches you is well below the headline loan. Borrow £150,000 on the worked example below and roughly £133,500 arrives. Size the loan off the cash you need in hand, not the number on the offer letter.
Worked example: £150,000 over nine months
At 1% a month, the interest is £150,000 x 1% x 9, which is £13,500. A 2% arrangement fee adds £3,000 and a 1% exit fee adds £1,500, so fees total £4,500. The full cost of finance is £18,000, which is 12% of the loan. On a flip appraisal that £18,000 sits in the costs column before you have lifted a paintbrush, which is why the finance line deserves as much scrutiny as the refurb.
What this calculator does not account for
It also assumes the exit happens on time. The most expensive bridging loan is the one still running in month thirteen of a twelve-month term, usually at a default rate. Build the exit, sale or refinance, before you borrow.
- Rolled-up or serviced interest, which compounds monthly or falls due monthly rather than being retained
- Valuation, legal and broker fees, which are charged in pounds rather than percentages
- Default rates if the term overruns, typically far above the headline rate
- Exit fees quoted on the gross loan versus on the GDV; check which basis your quote uses
- Drawdown facilities where interest is only charged on funds actually drawn
Frequently asked questions
Why are bridging rates quoted monthly?
Because the loans are short, typically a few months to eighteen, so a monthly rate maps onto how the product is used. It also makes the cost look smaller than it is. Multiply the monthly rate by 12 for a rough annual equivalent before comparing it with mortgage finance.
What is retained interest on a bridging loan?
The lender calculates the whole term's interest up front and deducts it from the advance on day one, so you make no monthly payments but receive less cash. It suits projects with no income during the works, which is most refurbs and flips.
What fees come with a bridging loan?
An arrangement fee, commonly a percentage of the loan, sometimes an exit fee, plus valuation, legal and broker costs in pounds. Because several charges are percentages of the loan, the fees scale with the borrowing; on short terms they can rival the interest itself.
How do I compare two bridging quotes?
Work out the total cost of finance in pounds over your realistic term, interest plus every fee, for each quote. A lower headline rate with a heavier arrangement and exit fee often costs more than a higher rate with light fees, especially on short terms.
Want this run automatically on any Rightmove listing?
PropDetect runs these numbers, and the rest of the deal, on every listing that matches your criteria: refurb costs from the photos, comparable sold valuations, rent, GDV and a strong, solid or avoid verdict across six strategies. You just read the result.
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