How much does a bridging loan cost?

The answer to “how much does a bridging loan cost” is interest plus fees. The total depends on your case and how long you borrow.

No figures appear here because costs depend on your case. A bridging specialist must give you a written quote showing the costs that apply to you.

How much does a bridging loan cost in total?

The cost is more than the interest. You need to account for charges when the loan starts, any payments during the loan and the amount needed to repay it.

A bridging specialist talks through your circumstances and gives you a quote. The lender decides whether to lend and sets the terms. A quote is not a lending decision.

The property offered as security, your existing mortgage and your plan for repayment can affect the terms. The lender needs to assess these before confirming the terms for your case.

When you are buying before selling, separate the borrowing cost from your wider moving budget. Your solicitor, removals, property taxes and overlapping household bills still need funding.

Look at the cash available for your purchase and the debt you must clear afterwards. A headline borrowing amount does not tell you either on its own.

How does bridging loan interest work?

Bridging loan interest is the charge for borrowing the money. It builds up while the loan remains outstanding, even if you do not make monthly interest payments.

Monthly interest describes a cost over time. It does not, by itself, tell you when payment is due or which balance the lender uses to calculate it.

Some lenders calculate interest daily. Check your own agreement rather than assuming every lender works the same way.

Is a bridging loan interest only?

Bridging loans are generally interest only. This means regular payments, where required, cover interest rather than gradually paying back the money borrowed.

You still need to repay the capital at the end. Depending on the interest method, you may also owe unpaid interest and charges at that point.

If you already pay a repayment mortgage, this is a different pattern. Paying the bridging interest does not steadily reduce the borrowing in the way your mortgage payments may do.

What are serviced, retained and rolled up interest?

These terms describe how you pay the interest. The lender’s product determines which methods are available. You cannot assume you can choose freely between them.

What is serviced interest?

You pay the interest each month from your income or other available money. The capital remains due at the end. The lender checks whether you can afford the payments.

Include your existing mortgage and household bills when considering those payments. If your old home remains unsold, its costs continue alongside the borrowing.

What is retained interest?

The lender sets aside interest from the borrowing at the start for an agreed period. This usually means no monthly interest payments during that period, but less cash reaches your purchase.

Ask what happens to unused retained interest if you repay early. Also ask how you would pay interest if the loan outlasts the period covered. The agreement controls both.

What is rolled up interest?

Interest accumulates and you pay it with the loan at the end. The repayment balance grows even though you make no monthly interest payments.

Ask whether the lender charges interest on interest already added to the balance. This is called compounding. It can make the debt grow further as borrowing continues.

The interest method affects cash available now and debt due later. Ask a bridging specialist to show both using the lender’s terms.

Which fees and charges should you check?

Ask for every charge, who receives it and when you must pay it. Fees paid separately still count towards the cost of borrowing.

• Arrangement charge. This pays for setting up the loan. It may be paid separately, added to the debt or deducted before the money is released.
• Valuation charge. This covers the lender’s assessment of the property offered as security. The property and valuation method can affect the charge.
• Legal charges. You pay for your legal work and may also pay the lender’s legal costs. Ask what the estimate includes and what could require further work.
• Exit charge. Some agreements charge when you repay. This is separate from interest and may differ from a charge for repaying early.

A lender’s valuation serves its lending decision. It is separate from a survey you might commission to investigate the condition of the home you plan to buy.

Check for administration, transfer and discharge charges too. Ask a bridging specialist to identify any separate charge for their work and when it becomes payable.

Fees added to borrowing can attract interest of their own. Ask which charges the lender adds to the debt.

Ask which costs you would still owe if the purchase or loan did not proceed. A valuation or legal work already carried out may still need paying for.

Why can you receive less than you borrow?

The gross loan is the borrowing before applicable deductions. The net advance is the money released after them. Retained interest and deducted fees can leave the net advance below the gross loan.

Money released may also need to clear an existing mortgage. That payment reduces what remains for the purchase, even though it settles a debt you already owed.

Ask for a breakdown that starts with the gross loan and lists each deduction. It should end with the amount your solicitor expects to have available for the move.

Match that amount against your solicitor’s completion statement. This lists the purchase money and other sums needed to complete. A shortfall still needs funding before the purchase can proceed.

Keep the cost separate from the capital. The capital is money you borrowed and must return. Interest and charges are what you pay for using it.

Why does time have such a large effect on cost?

Time is usually the biggest driver of the final cost once the borrowing and terms are set. Interest continues while the debt remains unpaid. The costs add up over time.

A buyer may request further surveys, their mortgage may fall through or a title issue may delay the legal work. An accepted offer does not mean sale proceeds are available to repay your loan.

In England and Wales, an offer becomes binding at exchange of contracts. That is still distinct from completion, when the purchase money changes hands.

Scotland differs. The contract becomes binding when missives are concluded. Ask your solicitor what your commitments mean before relying on sale proceeds.

Your repayment plan, or exit strategy, needs to allow for uncertainty. A sale or a new mortgage may not happen as planned.

Repaying early may reduce interest, but check for a minimum interest charge, an exit charge and the rules on retained interest. A shorter loan does not remove every cost.

How should you use a bridging loan cost calculator?

Use the calculators with figures a bridging specialist has given you. Do not fill gaps with advertised examples or assumptions about what a lender might offer.

Try the figures from your quote, then the figures a bridging specialist gives you for later repayment.

Check that the calculation uses the same interest method as the quote. Ask a bridging specialist to explain any difference between the result and the lender’s repayment estimate.

A calculator follows its inputs. It cannot decide whether your home will sell, whether a new mortgage will be available or whether the lender will agree to lend.

Keep household bills and moving expenses alongside the result. They affect how much money you need, even when they are not charges made under the loan agreement.

What are the risks if repayment is delayed?

If the loan is secured on your home, your home is at risk. It could be repossessed if the loan is not repaid.

An extension depends on the lender’s agreement. It may involve further charges and interest. Do not build your budget around an extension being available.

A lower sale price can leave less money after your existing mortgage and selling costs are paid. Test whether that would leave enough to clear the bridging debt.

For a loan on your home, take advice from a mortgage adviser or bridging specialist. They can assess the proposed borrowing against your circumstances.

Ask your current mortgage lender about other options. Discuss the alternatives to bridging loans, including changing the move’s sequence, with an adviser.

You can also get free guidance from MoneyHelper. Guidance can help you prepare for an advice conversation and understand the questions to ask.

What should you ask for in writing?

Request a complete cost breakdown from a bridging specialist before committing. It should distinguish costs already fixed from estimates and explain what could change.

• The gross borrowing, every deduction and the net amount available for your purchase.
• The interest method, the balance used to calculate interest and any interest charged on added fees or interest.
• All charges, including legal estimates, and which remain payable if the loan does not complete.
• Any monthly payments and the total needed to repay at your expected repayment point.
• The effect of later repayment, including extension terms and charges if you miss the contractual repayment date.
• The rules on early repayment, unused retained interest, minimum interest and exit charges.

Ask your solicitor to explain any term you do not understand before you sign. Check that the lender’s terms and your completion statement agree on the cash available and the debt to repay.

Common questions

Last updated 6 November 2026