Written by the Lendus editorial team · Last updated: April 2026
A bridging loan's total cost includes interest (0.45–1.2% per month), an arrangement fee (1–2% of the loan), valuation fees (£300–£2,000), legal fees (£1,500–£4,000), and potentially an exit fee (0–1%). On a £300,000 loan at 0.75% per month over 6 months with a 1.5% arrangement fee, total costs typically reach £18,000–£22,000.
The biggest cost. UK bridging loan interest rates range from 0.45% to 1.2% per month depending on:
Interest is almost always rolled up — it compounds monthly on the outstanding balance and is repaid in one lump sum when the loan is redeemed. You don’t make monthly payments.
Charged by the lender for underwriting and setting up the loan. Typically 1–2% of the gross loan amount, deducted from the advance on day one.
| Loan Amount | Fee at 1% | Fee at 1.5% | Fee at 2% |
|---|---|---|---|
| £150,000 | £1,500 | £2,250 | £3,000 |
| £300,000 | £3,000 | £4,500 | £6,000 |
| £500,000 | £5,000 | £7,500 | £10,000 |
| £1,000,000 | £10,000 | £15,000 | £20,000 |
The lender commissions an independent RICS valuation of the security property. Fees depend on property type and value:
Paid upfront, directly to the surveyor. Cannot usually be added to the loan.
Two sets of solicitors are involved — yours and the lender’s — and you pay both.
Total legal cost: typically £1,500–£4,000
For second charge bridging loans, the existing mortgage lender may also need to provide consent, which can add to the legal cost and timeline.
Charged by some (not all) lenders when the loan is repaid. Typically 0–1% of the outstanding balance at redemption.
Many lenders have removed exit fees to remain competitive. However, some still apply them, particularly on lower-rate products. Always confirm upfront whether an exit fee applies.
Most bridging brokers are paid a procuration fee by the lender (typically 0.5–1% of the loan) and do not charge the borrower directly. Some brokers charge both a borrower fee and a lender fee for complex cases. A good broker should declare their fee structure upfront.
Scenario: You’re buying a renovated flat to resell. Purchase price £380,000, expected sale price £480,000 in 8 months. You need £280,000 (73.7% LTV against purchase price, 58.3% against sale price).
| Cost | Amount |
|---|---|
| Loan amount (gross) | £280,000 |
| Monthly interest rate | 0.80% |
| Term | 8 months |
| Interest (rolled-up, compounding) | £280,000 × [(1.008)^8 − 1] = £18,542 |
| Arrangement fee (1.5%) | £4,200 |
| Valuation fee (residential) | £600 |
| Your legal fees | £1,200 |
| Lender’s legal fees | £900 |
| Exit fee | £0 (lender doesn’t charge) |
| Broker fee | £0 (paid by lender) |
| Total cost of finance | £25,442 |
| Total repayable on exit | £298,542 |
Profit on resale after finance costs: £480,000 − £380,000 − £25,442 = £74,558 gross (before tax and any refurbishment costs)
Even a 5% reduction in LTV can save 0.15–0.2% per month. On the £280,000 example above, dropping to 65% LTV (£231,000) at 0.65% per month:
If you choose a lender with daily interest calculation and no minimum interest period, redeeming at month 6 instead of month 8 saves 2 months of interest plus reduces the compound balance. On the example above, redeeming at month 6 instead of 8 saves approximately £4,800.
A lender offering 0.70% per month with a 2% arrangement fee vs 0.80% per month with a 1% arrangement fee:
In this case, the slightly lower rate with higher fee wins. Always run both calculations.
Ask lenders explicitly about:
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