Do you want to know “how much does a bridging loan cost”? A bridging loan can be a very convenient product when you need access to short-term funding, and you’ll usually pay around 1% to 2% of the overall cost of the loan.
There are some fees you need to think about when you’re considering taking out a bridging loan. You may need to pay valuation and survey fees if you’re securing the loan against a property, and the loan will accrue interest. You may also need to pay legal fees and broken fees. There may be other administrative fees to cover too.
Although there are a few charges to factor in, bridge loans or bridging loans can come in very handy when you need swift access to cash. They’re particularly popular amongst people who want to buy properties but are still waiting for their existing properties to sell. People can pay back their bridge loans once the sales of assets like homes come through. The loans are popular with individuals and businesses alike.
What are the major benefits of bridging loans?
Bridging loans UK have many benefits for people who need to raise money quickly. They can be incredibly valuable not only for people who want to purchase their dream home, and they can help you make a big profit if you want to buy a property that you can renovate and sell on for a profit. Some people have used these loans to buy properties that mainstream lenders won’t help them mortgage, before renovating them and making them mortgageable.
How much are bridging loans in the UK?
Bridging loans in the UK typically cost 0.5% to 1.5% per month, which works out at around 6% to 18% per year, depending on the lender and the borrower’s circumstances. In addition to interest, you’ll usually pay an arrangement fee (1–2%), legal fees, a valuation fee, and sometimes an exit fee. Read more about how bridging loan interest is calculated.
A typical UK bridging loan includes:
Monthly interest: 0.5% – 1.5%
Arrangement fee: 1% – 2% of the loan amount
Valuation fees: £300 – £1,000+ (depending on property value)
Legal fees: ~£1,000+
Exit fee (sometimes): 1% of the loan
Example: On a £100,000 bridging loan, you might pay around £1,000–£1,500 per month in interest, plus a £1,500 arrangement fee and associated costs.
Put simply: bridging loans are more expensive than traditional mortgages, but they offer fast, flexible funding when you need to complete a property purchase quickly.
Why might a bridging loan be better than another form of lending?
A big reason why so many people take out bridge loans is that lenders aren’t as strict about eligibility. You could even get a bridging loan with poor credit if you’re able to offer something valuable as collateral as there will be less risk for the lender. These loans also have quick turnarounds, so you could get access to the finance you need within just a few days.
How does interest work when it comes to bridging loans?
Interest will normally be accrued monthly rather than annually. This can be advantageous as you’ll only need to pay interest for the time you had the loan if you repay it early.
Influences on bridge loan interest rates
Your bridge loan interest rate can be influenced by:
The loan-to-value ratio
This is the relationship between how much you’re borrowing and your property value. The lower your LTV ratio, the less interest you can expect to pay. If your loan is worth the full value of the property, you’ll pay the most interest.
The amount of borrowing and how long you need it for
There’s a chance you could get a particularly low rate if you have a very strong exit strategy and are likely to repay the loan before the deadline. The stronger your case is, the better the interest rates are likely to be.
What condition the property is in and where it is
If the property is in poor condition, lenders might see it as a risk and charge you more interest. Properties that need lots of work can be much harder to sell. Location can also have a big influence. Bridge Loan Direct funding for landowners can be harder to sell. This means you might have to pay more interest if selling a rural property.
Whether you need a regulated or unregulated loan
If you live in the property you plan to sell, you’ll need a loan that’s regulated by the FCA or Financial Conduct Authority. If someone you’re not related to lives in it, you’ll have to get an unregulated loan. You may have more lenders willing to work with you if you need an unregulated loan. Regulated loans tend to have lower interest rates than unregulated loans, and your money will have more protection.
Typical Bridging Loan Cost Examples
Bridging loan costs vary depending on loan size, term, and lender criteria. You can use our bridging loan calculator to estimate your interest and overall costs.
Illustrative ranges only — exact pricing depends on LTV, property, lender and exit strategy.
| Loan Size | Typical Monthly Interest | Arrangement Fee (1–2%) | Other Fees (est.)* | Example 6-Month Cost** |
|---|---|---|---|---|
| £100,000 | £1,000–£1,500 / mo (0.5–1.5%) | £1,000–£2,000 | £1,600–£3,000 | £7,600–£14,000 |
| £250,000 | £2,500–£3,750 / mo | £2,500–£5,000 | £2,000–£4,000 | £17,000–£31,500 |
| £500,000 | £5,000–£7,500 / mo | £5,000–£10,000 | £3,000–£6,000 | £33,000–£61,000 |
| £1,000,000 | £10,000–£15,000 / mo | £10,000–£20,000 | £4,000–£8,000 | £64,000–£118,000 |
* Other fees typically include valuation, legal, admin/drawdown, and (where applicable) exit fees.
** Example 6-month cost assumes monthly interest × 6 + arrangement + other fees; actual totals vary by lender terms and LTV.
Your credit score
When it comes to bridging loans, lenders normally pay less attention to your credit rating. This is because they have the security of knowing the loan is secured against a valuable asset. However, a low credit score can still have an impact on how much interest you pay and mean you need to pay more in interest than someone with a better one.
Paying the interest on a bridge loan
You may have the option of paying the interest monthly. However, many people roll the interest into the sum they repay at the end of the agreement. You’ll normally pay at the end if you have a regulated loan.
Bridge Loan Costs
Arrangement fees
You’ll normally need to pay a fee of 2% to get the loan arranged. This will either be 2% of the gross or net loan amount, with interest on gross fees costing more.
Redemption fee
Another charge you’ll need to consider is the redemption fee, which is used to remove the legal charge from the property you’re selling.
Survey or valuation fees
The lender will need to find out how much the property you’re selling is worth, so you’ll need to pay to have a survey or valuation carried out. The fee you pay can depend on how much work has to be done as part of this process, as well as the value of the property. The fee could be anywhere between a few hundred or over £1,000.
Exit fees
You may also be charged an exit fee, although not all lenders do this. If you do need to pay this fee, it should be around 1.25% of the total loan amount.
You’ll also usually need to pay a small telegraphic transfer fee.
Drawdown fees
You will also need to pay a drawdown, admin or assessment fee. This is normally around £300.
Legal fees
When you take out a bridge loan, it will be recorded as a charge against the title of the property. The lender will pass the cost of this onto you. The cost of this tends to be around £1,000 on average.
Broker fees
You’ll also need to pay for the services of your broker that navigates the market to find you the best deal. Costs tend to stand at around £1,000, though this can vary.
Which fees do I need to pay right away?
You’ll pay some of the costs upfront and others at the end. Legal fees, survey fees and broker’s fees normally need to be paid when you take out the loan. Everything else is usually charged at the end when your property sale goes through.
Is there anything I can do to reduce the cost of a bridging loan?
You may be able to secure your loan against the property you’re buying as well as the one you’re selling if you want to reduce your interest rates. Another option could be to offer a deposit for the loan. For a full overview of how bridging loans work, visit our main bridging loans guide
You are likely to pay more if you still have a mortgage on the property you’re selling as this will be a second charge loan. Some people get around this by taking out a large loan to pay off their mortgage to make the loan a first charge one. Another way to keep costs down could be to opt for dual representation, so the solicitor is representing you as well as your lender.
It’s possible that you could get a desktop valuation arranged if you have a low LTV ratio and the lender has dealt with many properties like yours before. This can help you avoid the cost of a surveyor.
Find a bridging loan with us
At Bridge Loan Direct, we are here to help if you’ve been wondering “how much does a bridging loan cost?” and want to keep bridge loan costs down. We have decades of market experience between us and are able to offer a bespoke service that’s tailored directly towards your specific needs. We work tirelessly to get the best deals possible for our clients and work with hundreds of lenders to help our clients find the right solutions. We’re ready to hear from you right now if you want to find out more about taking out a bridge loan.
Estimate your finance today by using our bridging loan calculator to find out how much bridging loan finance is likely to cost you.
