A bridging loan is a short-term loan secured against property, typically running from 1 to 18 months, used to "bridge" a gap in funding — for example buying a new home before your current one sells, completing an auction purchase within a tight deadline, securing a fast completion that a standard mortgage can't meet in time, or funding a refurbishment before refinancing onto a conventional mortgage (a "refurbish and refinance" or BRRR strategy). This calculator works out the total interest cost, the net amount actually advanced to you, and the total cost of the loan — across retained, rolled-up/compounded and serviced interest options — so you can see exactly what a bridging loan will cost before you commit.
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Bridging finance is a specialist, short-term form of secured property lending. The total cost depends heavily on which interest payment method you choose — retained, rolled-up/compounded, or serviced — alongside the monthly rate, the term, and the arrangement and exit fees charged by the lender.
Based on your loan amount, term and monthly rate, the calculator works out the total interest due under your selected method, the net amount actually advanced to you once upfront fees are deducted, and the total cost of the loan including interest and all fees. The monthly rate's annualised (compounded) equivalent is shown so you can compare it against standard mortgage rates.
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Bridging finance is a specialist, higher-cost, higher-risk product that should normally only be used short-term, with a clear and credible exit strategy in place before you borrow — typically the sale of a property or a refinance onto a standard mortgage. This calculator is provided for general guidance only and does not constitute financial advice; always consult a broker or specialist bridging lender before proceeding.
A bridging loan is a short-term loan secured against property — usually a first or second charge over the property being bought, refurbished, or already owned — designed to "bridge" a temporary gap in funding. Unlike a standard mortgage, which is repaid in monthly instalments over 20-35 years, a bridging loan is typically repaid as a single lump sum at the end of a term that usually runs from 1 to 18 months. Because it's short-term and fast to arrange, it's priced very differently to a mortgage: interest is quoted monthly rather than annually, and arrangement and exit fees make up a meaningful share of the total cost.
Bridging loans are used wherever speed or flexibility matters more than low cost. The most common scenarios include: breaking a property chain by buying a new home before your current one has sold; completing an auction purchase, which typically requires full payment within 28 days of the hammer falling — far too fast for most mortgage lenders; securing a fast completion on a property that would otherwise be lost to a cash buyer; and funding a refurbishment on a run-down or unmortgageable property, with the plan to refinance onto a standard buy-to-let mortgage once the work is done and the property is re-valued — often called a "refurbish, refinance and rent" (BRRR) strategy.
A closed bridging loan has a fixed, confirmed exit date — for example, you've already exchanged contracts on the sale that will repay the loan. Lenders see this as lower risk and will often price it more favourably. An open bridging loan has no fixed exit date — perhaps your property is on the market but hasn't sold yet — which carries more uncertainty for the lender and is usually priced a little higher, with a maximum term rather than a guaranteed one.
Lenders typically offer three ways to handle interest on a bridging loan, each with different pros and cons:
Bridging loan interest is quoted per month, typically somewhere between 0.4% and 1.5% per month depending on the lender, the LTV, the property type and the strength of the exit strategy. On top of interest, most lenders charge an arrangement (or facility) fee of around 1-2% of the loan, deducted from the advance, and some charge an exit fee of around 0-1% when the loan is repaid. Valuation fees, legal fees (for both you and the lender) and broker fees are usually payable separately, and a few lenders charge a non-refundable commitment or exit administration fee too — always ask for a full fee schedule before proceeding.
Bridging loans are priced for speed and short-term risk, not long-term affordability. Lenders have to underwrite and release funds quickly, often with less certainty over valuation and exit than a mortgage lender assessing years of income; they also price in the risk that an exit strategy (a sale or refinance) might be delayed or fall through. The combination of a monthly rate that looks small but compounds to a high annualised equivalent, plus an arrangement fee and sometimes an exit fee, means bridging finance is almost always significantly more expensive, pound for pound, than a standard residential or buy-to-let mortgage over the same period.
A first charge bridging loan means the bridging lender has the primary legal claim against the property — if there's no existing mortgage, or the bridging loan repays and replaces it, the bridging lender is first in line to be repaid from a sale. A second charge bridging loan sits behind an existing first charge mortgage that remains in place; the second charge lender is only repaid after the first charge lender, which is riskier for them, so second charge bridging loans typically carry higher rates and lower maximum LTVs than first charge equivalents.
An exit strategy is simply your plan for repaying the bridging loan at the end of its term — most commonly selling the secured property (or another property you own), or refinancing onto a standard mortgage or buy-to-let product once works are complete or a sale falls through. Because bridging finance is never intended to run indefinitely, lenders will assess how realistic and well-evidenced your exit strategy is as part of underwriting — a vague or unsubstantiated plan is one of the most common reasons an application is declined or priced more cautiously.
Most mainstream bridging lenders will lend up to around 70-75% of the property's value on a first charge basis, though this varies by lender, property type and exit strategy strength — some will stretch higher against strong security, while heavily discounted, bridging-specific LTV caps often apply to riskier property types (for example, properties needing significant structural work). Borrowing at a lower LTV generally secures a better rate, since the lender has a larger equity buffer if your exit strategy doesn't go to plan.
The central risk of any bridging loan is that your exit strategy doesn't materialise on time — a sale falls through, a buyer pulls out, or a refinance is delayed by valuation or underwriting issues. If that happens, interest usually continues to accrue (often at a higher default rate), additional fees can apply, and in the worst case the lender can take steps to repossess and sell the secured property if the loan still can't be repaid. Because bridging loans are interest-heavy and short-term, even a modest delay to your exit can add a meaningful amount to the total cost, which is why a realistic timeline and a credible backup plan matter as much as the headline rate.
Say you need a £200,000 bridging loan against a £300,000 property (a 66.7% LTV), for a 9-month term at 0.75% per month, with a 2% arrangement fee and a 1% exit fee. With retained interest, the full 9 months of interest (£13,500) is deducted upfront along with the £4,000 arrangement fee, so you receive a net advance of £182,500, and you repay £202,000 at the end (the £200,000 capital plus the £2,000 exit fee). With rolled-up interest, you'd receive £196,000 net (just the loan less the arrangement fee), but because interest compounds over 9 months the bill is slightly higher at around £13,912 — repaid along with the capital and exit fee as roughly £215,912 at the end. With serviced interest, you'd also receive £196,000 net, pay £1,500 a month in interest throughout the term, and then repay £202,000 (capital plus exit fee) at the end — the same total interest as retained, just paid along the way instead of upfront.
Bridging finance suits borrowers with a short, well-defined funding gap and a credible way to close it — a chain-break with a sale already agreed, an auction purchase with a refinance lined up, or a refurbishment project with a clear end value. It is generally not suitable as a substitute for long-term borrowing, or for anyone without a realistic plan to repay within the term, given how quickly interest and fees accumulate. Regulated bridging loans (secured on a property that is, or will be, the borrower's main residence) are overseen by the Financial Conduct Authority (FCA), while bridging loans secured purely against investment or commercial property are typically unregulated — either way, taking independent advice from a whole-of-market bridging broker before committing is strongly recommended.
If a refurbishment-to-let or standard buy-to-let strategy is part of your exit plan, these calculators can help you model the next stage once the bridging loan is repaid:
Bridging finance sits partly inside and partly outside FCA regulation depending on how it's secured — these official sources explain the regulatory position and how to check a lender or broker before you borrow: