Guide
How much does a
bridging loan cost?
Rate, arrangement fee, exit fee and legal costs: what you can expect to pay.
Written by Justin, Principal · Updated
Our guides are researched and drafted with digital tools, then written and approved by Justin, Principal, from his own experience.
The short answer
- A £200,000 bridging loan for 12 months costs from about £16,000 to about £24,400 in interest and fees, before valuation and legal costs. With those added, the total is about £19,100 to about £30,400, plus VAT on the valuation and legal costs.
- The lower figure uses the standard starting rate of 0.50% a month (first charge, under 50% loan-to-value, straightforward cases). The higher uses around 0.85% a month, the average on our completed deals over the last 12 months, most of them complex.
- Both assume a 1% lender arrangement fee, our 1% fee and no exit fee (a charge some lenders make when you repay). On complex cases an application fee is possible, agreed with you in writing first. It is not included in these figures.
- The valuation and legal fees, yours and the lender's, are in the second range. VAT at 20% is added to them. See rates and the calculator, or how fast a bridge can complete.
- A £500,000 loan for 12 months costs from about £40,000 at 0.50% a month to about £61,000 at 0.85%, with a 1% lender fee and our 1% fee, before valuation and legal costs.
- Repaying early can still mean paying a minimum period of interest. See early repayment.
- Illustrative, not a quote. Your rate and fees depend on your deal.
The cost to check first: early repayment
Justin, Principal, says many borrowers expect to pay only for the weeks they use. They assume a bridge repaid after six weeks costs six weeks' interest. Often the lender charges a minimum of three months' interest, due even if you repay within six weeks.
Where there is an early repayment charge, it is usually three months' interest; very occasionally six; some loans have none. Before you accept terms, ask the lender for the minimum interest period, in writing.
A £200,000 bridging loan held for 12 months
The interest is rolled up: it is added to the loan and paid when you repay, so there are no monthly payments. The loan carries a 1% lender arrangement fee. Our 1% fee is generally due on completion.
| Cost | Standard start (0.50%) | Our completed-deal average (around 0.85%) |
|---|---|---|
| Interest for 12 months, rolled up | £12,000 | £20,400 |
| Lender arrangement fee at 1% (lender fees are typically 1-2%) | £2,000 | £2,000 |
| Our fee at 1%, generally due on completion | £2,000 | £2,000 |
| Total, before valuation and legal costs | £16,000 | £24,400 |
Interest is simple, added to the loan and repaid at exit. No exit fee is assumed.
Valuation and legal costs on a loan of about £200,000. The valuation is generally a desktop valuation, an estimate of value made from records and data, without a visit to the property. It costs from nil to around £100. A full valuation costs up to around £2,000. The lender's legal fees are around £1,500 to £2,000, and your own solicitor's are usually about the same or slightly less. VAT at 20% is added on top of all of these. Every case is priced individually.
With a valuation and your solicitor's and the lender's legal fees, the 12-month total is about £19,100 to about £30,400, plus VAT on the valuation and legal costs. The lower figure assumes a desktop valuation at about £100 and legal fees of about £1,500 on each side. The higher assumes a full valuation at about £2,000 and legal fees of about £2,000 on each side.
Larger loans (£500,000 and over). Valuation costs £500 to £3,000 or more. Legal fees are £1,500 to £5,000 or more on each side, depending on the property and how involved the legal work is.
Why two rates? 0.50% a month is the starting rate for standard bridging in our data, shown on our rates page. Our completed deals over the last 12 months averaged around 0.85% a month, most of them complex cases.
Where the rate comes from
Bridging rates start from 0.50% a month (first charge, under 50% loan-to-value, straightforward cases). Development exit is priced case by case. We compare terms from 158 lenders active in the market. It is a starting point rather than a typical price. Current pricing by product is on our rates page.
A £200,000 loan held for 9 months
A shorter term cuts the interest. This example uses the same two rates as above: the standard start and our completed-deal average. It includes a 1% lender arrangement fee, our 1% fee, a valuation and both sets of legal fees.
| Cost | At 0.50% a month | At around 0.85% a month |
|---|---|---|
| Interest for 9 months, rolled up | £9,000 | £15,300 |
| Lender arrangement fee at 1% | £2,000 | £2,000 |
| Our fee at 1%, generally due on completion | £2,000 | £2,000 |
| Total, before valuation and legal costs | £13,000 | £19,300 |
| Plus a desktop valuation and lower legal fees (about £3,100) | about £16,100 | about £22,400 |
| Plus a full valuation and higher legal fees (about £6,000) | about £19,000 | about £25,300 |
VAT at 20% is added to the valuation and legal costs. Illustrative, not a quote.
Every Bridging Cost: Who Charges It, When and Whether You Get It Back
Interest, the arrangement fee, valuation and legal costs are the main costs. Exit fees and minimum interest periods depend on the lender. Many bridging loans use rolled-up interest, so there are no monthly payments: interest builds up and is repaid with the loan when you exit, leaving your cash free for the project.
The table scrolls sideways.
| Cost | Charged by | Typical amount | Usually paid when | Refundable if the deal fails? |
|---|---|---|---|---|
| InterestThe lender's return on the money lent | Lender | Bridging rates start from 0.50% a month (first charge, under 50% loan-to-value, straightforward cases). Rates as at 29 October 2026. Development exit is priced case by case | Rolled up: on exit. Retained: deducted on completion. Serviced: monthly | Only arises once the loan completes |
| Arrangement feeCovers the lender setting up the facility | Lender | 1–2% of the loan | On completion, usually deducted from the advance | Not normally due unless the loan completes |
| Application or commitment feeSome lenders charge to process a case or hold terms | Lender (some only) | An application fee is possible on complex cases, agreed in writing first. | On application or on accepting terms | Often not |
| Valuation feeThe lender needs an independent RICS view of the security | Valuer, instructed by the lender | Nil to about £2,000 + VAT | Before the valuation is instructed | Usually not, once the valuer is instructed |
| Lender's legal costsThe lender's solicitor checks title and takes the charge | Lender's solicitor | About £1,500–£2,000 + VAT for each side | On completion | You are usually liable for work already done; your solicitor may be asked for an undertaking |
| Your own legal costsYour solicitor acts for you on the purchase or refinance | Your solicitor | About £1,500–£2,000 + VAT for each side | On completion (some firms ask for money on account) | Work already done is normally charged |
| Our feeFinding the right lender and presenting your deal | bridging.fund | Generally 1% of the gross loan | On completion | Not due unless the loan completes |
| Our application feeOnly on more complex cases, where the work starts well before an offer | bridging.fund | An application fee is possible on complex cases, agreed in writing first. | As agreed in writing | As agreed in writing |
| Exit feeSome lenders price part of their return at the end | Lender | 0-1% of the loan, where charged. | On exit | Only arises once the loan completes |
| Minimum interest or early repayment chargeProtects the lender's return if you repay very early | Lender (some only) | Where there is an early repayment charge, it is usually three months' interest; very occasionally six; some loans have none. | On an early exit | Only arises once the loan completes |
Get it in writing before you proceed
Confirm the exit fee, any early repayment charge and any minimum interest period in writing before you accept terms. Each one is explained under hidden costs to watch for below.
Two illustrative scenarios (£500,000)
These are illustrations, not real deals or offers of terms. Interest is rolled up and shown at the standard starting rate of 0.50%. Legal costs cover the borrower's and the lender's solicitors.
| Cost | Held 9 months | Repaid after 4 months |
|---|---|---|
| Interest, rolled up (0.50% a month) | £22,500 | £10,000 |
| Lender arrangement fee, 1% | £5,000 | £5,000 |
| Valuation | £2,500 | £2,500 |
| Legal costs, both solicitors | £4,000 | £4,000 |
| Our fee, 1%, generally due on completion | £5,000 | £5,000 |
| Total, before VAT on valuation and legal fees | £39,000 | £26,500 |
Repaying after 4 months instead of 9 saves £12,500 in interest at 0.50%, or £21,250 at around 0.85%. The fees stay the same. Valuation and legal costs are higher on a loan this size. Run your own figures in the bridging calculator.
Term matters more than you think
The practical point: a lender that is slightly dearer but completes quickly can be cheaper overall if it gets you to your exit sooner. Speed matters when you are buying competitively too. Losing a deal because the money wasn't ready has a cost that never shows on a statement.
Put your own figures through the bridging calculator to see the total for your loan, term and fees.
A real example: a £250,000 bridge in Salford
This £250,000 loan in Salford completed in 48 hours, in June 2025. The right lender accepted a desktop valuation, which allowed for a quick process. It is not typical. Completion is typically 5 to 7 working days; some deals take longer, up to around 14, with the valuation usually the slowest step. More on how long a bridging loan takes.
The terms were a rate of 0.9% a month, an arrangement fee of around 2% and a minimum interest period of three months. There was no exit fee. The borrower refinanced onto a buy-to-let loan.
| Cost on the £250,000 loan | Amount |
|---|---|
| Interest for the three-month minimum | £6,750 |
| Arrangement fee, around 2% | about £5,000 |
| Exit fee | none |
| Minimum lender cost, before valuation, legal costs and our fee | about £11,750 |
Had this loan been repaid after six weeks, the full three months' interest of £6,750 would still have been due, against about £3,100 for the six weeks.
When Each Fee Falls Due
Only the valuation, and any application or commitment fee, is usually paid before completion. Most costs are settled on completion or at exit.
- 1
Before terms are agreed
Nothing, on a straightforward case. An application fee is possible on complex cases, agreed in writing first.
- 2
Accepting terms and instructing the valuation
The valuation fee, plus any lender application or commitment fee. These are usually non-refundable once the work has started.
- 3
Completion
The arrangement fee (usually deducted from the advance), retained interest if the interest is retained, both sets of legal costs, and our fee.
- 4
During the term
Nothing, if the interest is rolled up or retained. Monthly interest only if it is serviced.
- 5
Exit
The loan, rolled-up interest and any exit fee, repaid from the sale or the refinance.
How We Are Paid
Our fee is generally 1% of the gross loan, due on completion. An application fee is possible on complex cases, agreed in writing first. Sometimes a lender pays the broker a fee as well. If one does, it should be disclosed to you in writing.
We put every fee in writing before you commit. We arrange short-term finance for individuals, landlords, trustees, SPVs, LLPs and companies. For business or investment purposes only - never secured on a home you or your family live in.
Gross Loan vs Net Loan: What Actually Reaches Completion?
The gross loan is the facility in your offer. The net loan is what the lender actually sends to your solicitor on completion, after any fees and retained interest are deducted. Your completion funds have to be planned on the net figure.
Gross to net, in order
Start with the gross facility. Take off the arrangement fee, if it is deducted. Take off retained interest, if the interest is retained. Take off any lender fees deducted on completion, and any broker fee paid from the advance. What is left is the net advance. Our how bridging works page shows the simplest case, an arrangement fee deducted on day one.
Retained, rolled-up or serviced interest
How the interest is paid changes the net figure. Retained interest is taken off the advance on day one, so you receive less. Rolled-up interest is added to the debt and repaid at exit, so it doesn't reduce the advance. Serviced interest is paid monthly, for example from rent, so it doesn't reduce the advance either, but it does need cash flow.
One small effect worth knowing: when the arrangement fee is added to the loan, you pay interest on it too. A 1% fee on £500,000 makes the balance £505,000, and over 9 months at 0.76% a month (the average published rate across 42 lenders, as at 25 October 2026) that adds £342 of interest. Not dramatic, but worth knowing when you compare quotes.
Will we be short at completion?
The cash you need to bring is the purchase price, plus SDLT, plus your own legal costs, plus any costs the loan doesn't cover, less the net advance. Ask for a written gross-to-net statement before you accept terms, so the number is agreed early.
Worked Example: Gross to Net on a £2.5m Bridge
Illustrative example. The figures are invented to show the mechanics. This is not a real deal and not an offer of terms.
An SPV buys a let warehouse for £3.6m with a £2.5m gross bridge. The lines below show the structure; the amounts depend on your lender's terms.
| Line | Amount |
|---|---|
| Gross facility | £2,500,000 |
| Less the arrangement fee, if deducted | 1–2% of the gross loan |
| Less retained interest, if interest is retained | Per your offer |
| Less lender fees deducted on completion | Per your offer |
| Less a broker fee paid from the advance, if applicable | Per the broker's terms |
| Net advance to your solicitor | Gross less the lines above |
| Purchase price, SDLT and your legal costs | £3,600,000 + SDLT + legal costs |
| Cash the SPV must bring | £3.6m + SDLT + legal costs, less the net advance |
The SPV borrowed £2.5m but did not receive £2.5m. Plan your deposit on the net advance.
Paid before completion: the valuation fee, plus any commitment fee. Paid on exit: rolled-up interest (if it wasn't retained) and any exit fee. To put your own numbers in, use the bridging calculator.
Which Costs Are Paid Upfront, and Which Come Out of the Loan?
Valuation fees and some application or commitment fees are usually paid before completion and are often non-refundable. Arrangement fees, retained interest and some lender fees are usually deducted from the loan. Exit fees and rolled-up interest are paid when you repay.
The cost table above shows each one, and the fee timeline puts them in order. If you need a set amount to land on completion, work from the net advance, as in the gross-to-net example.
Arrangement Fee, Broker Fee and Procuration Fee Are Three Different Things
The arrangement fee is charged by the lender. A broker fee is charged by the broker to you. A procuration fee is paid by the lender to the broker. Your offer and your broker's terms should show which of these apply to your loan.
Arrangement fee
Set by the lender, typically 1–2% of the loan, and usually added to the gross loan and deducted from the advance rather than paid in cash.
Broker fee
Charged by the broker for arranging the loan. Depending on the broker, it falls due on terms, on offer or on completion, and it is either taken from the advance or paid separately. Ours is generally 1% of the gross loan, due on completion. An application fee is possible on complex cases, agreed in writing first. See how we are paid.
Procuration fee
Paid by the lender to the broker for introducing the loan. It is not an extra cost to you on top of the arrangement fee. Ask your broker whether one is being received on your loan. Sometimes a lender pays the broker a fee as well. If one does, it should be disclosed to you in writing.
Comparing like with like
Once every fee is on the table, compare the total cost of borrowing, as shown in how to compare quotes properly.
What Affects Your Rate
The headline interest rate is not arbitrary. Lenders price each deal based on a matrix of risk factors. Understanding these helps you negotiate and, more importantly, structure your deal for terms that fit it.
Pushes the Rate Down
- Lower LTV (under 60%)
- Standard residential property
- Clean credit history
- Strong exit with evidence (AIP or exchanged)
- Experienced borrower / repeat client
- Larger loan size (£1m+)
- First charge only
Pushes the Rate Up
- Higher LTV (70%+)
- Non-standard property (commercial, land, HMO)
- Adverse credit history
- Weak or unverified exit
- Complex deal structure
- Second charge / behind existing debt
- Short notice / urgent completion
LTV is the biggest lever. Lower loan-to-value usually means sharper pricing. Above 75%, it may need specialist placement or additional security. A lower loan-to-value can move a deal into a cheaper pricing band.
Evidence beats intention on the exit. A sale agreed, or a refinance with an agreement in principle from the next lender, prices tighter than "we plan to sell in six months". The lender is pricing the uncertainty.
How the case is presented counts. A complete, well-evidenced case lets a lender price with confidence. A well-structured deal, placed with a lender that wants it, tends to be priced well.
See our rates page for current indicative pricing across different deal types.
How to Compare Quotes Properly
It is tempting to compare headline rates and pick the lowest number. But a 0.55% rate with a 2% arrangement fee and 1% exit fee can cost more than a 0.75% rate with 1% arrangement and no exit fee.
Compare the total cost of borrowing: the complete amount you will pay over the life of the loan, including every fee. This is what our calculator computes for you.
| Component | Lender A (lower rate) | Lender B (higher rate) |
|---|---|---|
| Monthly rate | 0.55% | 0.75% |
| Arrangement fee | 2% | 1% |
| Exit fee | 1% | None |
| Interest (£500k, 9 months) | £24,750 | £33,750 |
| Fees total | £15,000 | £5,000 |
| Total cost | £39,750 | £38,750 |
Lender B’s £38,750 beats Lender A’s £39,750 despite a higher headline rate.
Stamp Duty and Tax Considerations
The finance costs above are only part of the picture. Tax can be a large cost in a bridging transaction. Here’s what you need to factor in.
Stamp Duty Land Tax (SDLT), as at October 2026
Bridging purchases of investment property attract the 5% surcharge for additional dwellings (assuming you already own a residential property). On a £500,000 purchase, that’s £40,000 in SDLT alone at current England rates, a sum in the same league as the total bridging costs. This is a day-one cash outflow that needs to be in your project appraisal from the start.
If you’re purchasing through a limited company or SPV, the surcharge applies on every residential acquisition regardless of whether the company owns other properties. There is no first-time buyer relief for companies.
For non-residential or mixed-use properties, the SDLT rates are different (and typically lower). Land transactions have their own rate bands. The key point: calculate SDLT early and treat it as a fixed project cost, not an afterthought.
Corporation Tax and Interest Deductibility
Tax treatment depends on your structure and on whether you are trading or investing. Ask your accountant how the costs of a bridging loan are treated for you.
For individual borrowers, the tax treatment is different and depends on whether you’re trading (flipping) or investing (holding). The rules around interest deductibility for individual landlords changed significantly in 2020, so ask your accountant for the treatment specific to your structure and strategy.
Capital Gains Tax (CGT)
If you’re buying, refurbishing, and selling within the bridging term, capital gains tax applies to the profit. For companies, this is paid through corporation tax: 19% on profits up to £50k, 25% over £250k, with marginal relief in between. For individuals, CGT rates on property disposals are 18% (basic rate) or 24% (higher rate), with an annual exempt amount that reduces the taxable gain.
Tax treatment depends on your structure and on whether you are trading or investing. Ask your accountant how the costs of a bridging loan are treated for you.
If you’re buying and selling frequently through a company, HMRC may treat the activity as property trading rather than investment. Trading profits are subject to corporation tax but not CGT, and the distinction matters for how you structure your business. Take advice early.
VAT, as at October 2026
Bridging loan interest is exempt from VAT, so you won’t see VAT added to your interest charges. However, several other costs in the transaction may attract VAT at 20%:
- Arrangement fees: some lenders charge VAT on their arrangement fee, others don’t. Check whether quoted fees are inclusive or exclusive.
- Our fee: arranging credit is normally exempt from VAT, so our 1% fee on a £500,000 loan is £5,000 with no VAT added.
- Legal costs: solicitors’ fees always attract VAT. A £3,000 legal bill becomes £3,600 inclusive.
- Valuation fees: RICS valuations are subject to VAT.
If you’re VAT-registered and the property transaction involves commercial property opted to tax, some of this VAT may be recoverable. For most residential investment deals, the VAT on professional fees is simply an additional cost. Always check whether quotes are VAT-inclusive or exclusive, because it can make a material difference to your total outlay.
Tax treatment depends on individual circumstances and is subject to change. The figures above are illustrative. Always consult a qualified accountant or tax adviser before committing to a transaction.
How to Reduce Your Bridging Costs
Bridging finance is a premium product, but that doesn’t mean you should overpay. There are practical steps you can take to reduce the total cost of your facility, some before you apply, and some through how you structure the deal.
Lower your LTV
More equity means lower risk for the lender, which means a lower rate for you. Bridging lenders price in bands: 0-50% LTV, 50-60%, 60-65%, 65-70%, 70-75%. A lower loan-to-value can move a deal into a cheaper pricing band. If you have equity in other properties, offering additional security to bring the effective LTV down is another way to access better rates.
Choose lenders with no exit fee
Exit fees vary: 0-1% of the loan, where charged. Check yours in writing before you accept terms. A lender with a slightly higher monthly rate but no exit fee can be cheaper overall, as the comparison table above shows.
Use dual-representation solicitors
Where a lender lets one firm act for both sides, legal costs can be lower. This is called dual representation. Not every lender or deal allows it.
Exit early
If your bridging loan uses rolled-up interest with no minimum interest period, you only pay for the months you use. Exiting in month 4 instead of month 6 saves two months’ interest. On a £500,000 loan at 0.65%, that’s £6,500 saved. The key is choosing a lender with no minimum interest period and no early repayment charge. Some lenders lock you into 3 or 6 months’ minimum interest regardless of when you repay.
Compare total cost, not headline rate
A low headline rate can cost more once fees are added. A 0.55% rate sounds better than 0.75%, but when you factor in a higher arrangement fee and an exit fee, the “cheap” rate can cost you thousands more. Always compare the total cost of borrowing over your expected term. Our calculator is built for exactly this: plug in the full fee structure of each option and compare the bottom line.
Terms can be negotiated
Rates, fees, minimum interest periods, exit fees and conditions can be negotiated. Illustrative: what each lever is worth on a £1m loan. Reducing the arrangement fee from 2% to 1.5% saves £5,000. Getting a 1% exit fee waived saves another £10,000. Securing a rate 0.10% lower per month saves £6,000 over 6 months.
Frequently Asked Questions
How much is a 200k bridging loan?
What does a £500,000 bridging loan cost over 12 months?
How much will bridging finance cost?
What is the early repayment charge on a bridging loan?
How are you paid?
Is the broker fee taken out of the loan?
Is the arrangement fee the same as the procuration fee?
Related Finance
Discuss Your Deal
If you'd like the rate, every fee and the total cost of borrowing on your own deal set out in writing before you commit, tell us about it. Justin reads every enquiry himself. He replies the same working day, often within a couple of hours - usually by phone. It is always a confidential, no-obligation chat.