Bridging Loan Calculator
Calculate the true cost of bridging finance. Compare interest types, fees, and find the effective annual rate for your short-term property loan.
Related Calculators
About the Bridging Loan Calculator
What it does and how it helps you
The Bridging Loan Calculator helps UK property investors calculate the true cost of bridging finance. Compare retained, rolled up, and serviced interest options. Calculate total costs, effective annual rates, and understand exactly what you'll receive and repay.
How It Works
Understanding the calculation method
Bridging loans are short-term secured loans used to 'bridge' a financing gap—typically when buying a property before selling another, purchasing at auction, or funding a quick refurbishment. They're faster than traditional mortgages but more expensive, making accurate cost calculation essential.
Understanding Bridging Costs
Bridging finance costs comprise several elements:
1. Monthly Interest Rate: Quoted as a percentage per month (e.g., 0.85%pm). Multiply by 12 for the annualised rate, though this doesn't account for compounding or fees.
2. Arrangement Fee: Typically 1-2% of the loan amount, charged upfront. Sometimes called a facility fee.
3. Exit Fee: 0-1% of the loan, charged when you repay. Some lenders don't charge exit fees.
4. Valuation & Legal Fees: Professional fees for valuation and legal work, typically £2,000-5,000 combined.
Interest Payment Methods
The method of paying interest significantly affects your cashflow:
Retained Interest: Interest for the full term is deducted from your loan upfront. If you borrow £200,000 with £15,000 retained interest, you receive £185,000 (minus fees). You repay £200,000 at exit. This is common for developers who don't want monthly payments.
Rolled Up Interest: Interest accumulates monthly and is added to the loan balance, paid in full at exit. You receive more upfront but repay more at the end. If you exit early, you only pay interest for the months used.
Serviced Interest: You make monthly interest payments throughout the term. This costs less overall but requires monthly cashflow. Some lenders offer part-serviced options.
True Cost Calculation
The headline monthly rate doesn't tell the full story. Our calculator shows the 'Effective Annual Rate'—the true cost including all fees, expressed as an annual percentage. A 0.85%pm bridge with 2% arrangement fee might have an effective rate of 15-18% depending on the term.
Loan to Value (LTV)
LTV affects your rate and availability:
- Up to 50% LTV: Best rates (0.55-0.75%pm), most lender choice - 50-65% LTV: Competitive rates (0.65-0.90%pm), good availability - 65-70% LTV: Higher rates (0.75-0.95%pm), fewer lenders - 70-75% LTV: Premium rates (0.85-1.10%pm), specialist lenders only - Above 75% LTV: Difficult to source, may need additional security
When to Use Bridging
Bridging finance works best for:
- Auction purchases (28-day completion) - Chain breaks (buy before you sell) - Uninhabitable properties (no mortgage available) - Quick refurbishment and flip - Short-term cash needs against property equity - Securing deals that require speed
Always have a clear exit strategy—bridging without a plan to repay can be catastrophic.
When to use this calculator
Use this calculator when comparing bridging loan options, planning auction purchases, calculating refurbishment project costs, or understanding the true cost of short-term property finance. It's essential for comparing different interest payment methods and understanding what you'll actually receive versus what you'll repay.
Frequently Asked Questions
Common questions about this calculator