Bridging finance is priced differently from a standard mortgage, and borrowers who compare only the headline monthly rate can misjudge the true cost. With Bank Rate at 3.75% following the Bank of England’s September 2026 hold, short-term lending remains priced well above long-term residential rates, because lenders are compensating for speed, flexibility and a short repayment horizon. This guide explains each cost you are likely to meet so you can compare offers on a like-for-like basis.
The interest rate: monthly, not annual
Bridging interest is normally quoted per month, not per year. A rate expressed monthly looks small, but over a 12-month term it compounds into a meaningful figure. Always ask for the total interest payable over the expected term and the equivalent annual rate, not only the monthly percentage. Rates vary with loan-to-value (LTV), the security, the borrower’s profile and whether the lend is first or second charge.
How interest is paid: retained, rolled up or serviced
There are three common structures. With retained interest, the lender deducts the interest for the agreed term from the advance, so you receive less cash on day one but make no monthly payments. With rolled-up interest, interest is added to the loan and repaid at the end. With serviced interest, you pay interest monthly and the capital is repaid at exit. Retained and rolled-up structures increase the gross loan and reduce the headroom available within the lender’s maximum LTV, which matters if your security is already tightly geared.
Arrangement and exit fees
Most lenders charge an arrangement fee, usually a percentage of the gross loan, which is often added to the facility. Some also charge an exit fee on repayment, and some charge a minimum interest period. Clarify whether early repayment saves you interest or whether a minimum term applies. Where a lender advertises a low rate, check whether the fees are higher to compensate.
Third-party costs
Budget separately for costs that are not paid to the lender:
- Valuation fee – the lender’s surveyor assesses market value and, often, a 90- or 180-day value. Fees scale with property value and complexity.
- Legal fees – you will usually pay your own solicitor and the lender’s solicitor. Complex titles, auctions and development security cost more.
- Broker fee – where applicable, we disclose any fee before you commit.
- Insurance and any required reports – for example building insurance, and for older or refurbishment properties additional surveys.
Default and extension charges
If your exit is delayed, the loan may roll onto a higher default rate or require an extension, usually with a further fee. Because delays in sales and refinancing are common, build a contingency into your cost model and read the extension terms before you sign. Our guide to bridging loan exit strategies explains how to plan a realistic repayment route.
A worked illustration
As a purely illustrative example, a borrower seeking a net advance of £300,000 for nine months with retained interest and a 2% arrangement fee must borrow materially more than £300,000 gross, because interest and fees are deducted from the facility. The gross loan, and therefore the LTV against the security, is higher than the net figure suggests. Always ask for an illustration showing net advance, gross loan, total interest, total fees and the LTV at gross.
Comparing offers properly
Compare the total cost of funds over your expected term, not the monthly rate alone. Check the exit fee, the minimum term, how valuation is determined, whether the lender will allow a further advance for works, and how quickly it can complete. For time-critical purchases, certainty of completion can be worth more than a marginally lower rate. If you are buying at auction, see our guide to bridging finance for auction property, and if your purchase depends on a sale, read about using bridging finance to break a property chain.
Regulated and unregulated bridging
Bridging loans secured on a property you or your family will live in are regulated by the FCA. Loans for investment, business or development purposes are generally unregulated. This affects the protections available to you; see regulated vs unregulated bridging loans for the detail.
Speak to a broker before you commit
We search the lender market for bridging terms that fit your timescale and exit. Explore our bridging finance service, browse the bridging and development finance hub, check the areas we cover, or contact us for an illustration based on your case.
Your property may be repossessed if you do not keep up repayments on a loan secured on it. Most bridging finance for investment or business purposes is not regulated by the Financial Conduct Authority. Figures are illustrative and not an offer; terms depend on individual circumstances and lender criteria.
Giles Finance is a trading style of Giles Finance & Consultancy Services, authorised and regulated by the Financial Conduct Authority (FRN 726857).