Bridging Loan Calculator

Bridging loans exist to solve a timing problem — you need to complete on a purchase before your existing property has sold, or before a mortgage or other longer-term finance is in place. Our bridging loan calculator estimates the real cost of this short-term finance, which is priced very differently to a standard mortgage.

Why Bridging Loans Are Priced by the Month, Not the Year

Unlike mortgages, which quote an annual interest rate, bridging finance is almost always priced as a monthly rate — commonly somewhere between 0.4% and 1.5% per month, depending on the lender, the loan-to-value, and how the deal is structured. This reflects the short-term nature of the product, typically ranging from a few weeks up to 12–24 months. It also means the effective annualised cost can look startlingly high if you naively multiply the monthly rate by twelve — bridging finance is genuinely expensive per month, which is exactly why it should be used as a short-term bridge, not a long-term borrowing solution.

Rolled-Up vs Retained Interest

Most bridging loans let you choose how interest is handled. With rolled-up interest, nothing is paid monthly — interest compounds and is added to the amount owed, all repaid together at the end. With retained interest, the lender deducts the total expected interest from your loan upfront, so you receive a smaller net advance but owe nothing extra monthly during the term. Rolled-up suits borrowers who need to preserve cash flow during the bridge; retained suits those who want to know their maximum liability from day one, without compounding.

Open vs Closed Bridges

A closed bridge has a fixed, agreed exit date — for example, a confirmed completion date on your existing property’s sale — and typically carries a lower rate because the lender’s risk is more predictable. An open bridge has no fixed exit date, relying instead on a clear but less certain repayment plan, such as an ongoing sale process, and usually carries a higher rate to compensate for that extra uncertainty.

A Worked Example

A £150,000 bridging loan at 0.85% a month over 6 months, with a 2% arrangement fee and 1% exit fee: the rolled-up interest compounds to roughly £7,800 over the term, plus £3,000 arrangement fee and £1,500 exit fee — a total cost of around £12,300, or roughly 8.2% of the loan for half a year’s finance. This underlines why bridging finance is only sensible when your exit strategy — a sale, refinance, or other fund release — is realistic and reasonably close to certain.

First and Second Charge Bridging Loans

A first charge bridging loan is secured against a property with no existing mortgage or borrowing on it — the lender has the primary legal claim. A second charge bridging loan sits behind an existing mortgage on the same property, giving the bridging lender a secondary claim if the property is sold, which is typically riskier for the lender and therefore priced at a somewhat higher rate. Second charge bridging can be useful if you want to raise funds against a property without disturbing an existing, favourably priced mortgage that you do not want to refinance away from. Whichever structure you use, the total borrowing against the property (existing mortgage plus bridging loan) will need to stay within the lender’s maximum acceptable loan-to-value, so it is worth checking this early in the process rather than assuming the full property value is available to borrow against.

Frequently Asked Questions