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How Much Does Bridging Loan Cost in 2022?

Written by, Marija Petkova

Updated April, 8, 2023

If you need a large amount of money fast, to buy a property or fill in for a buyer who’s dropped out of your chain, then you might consider getting a bridging loan. 

But how much does a bridging loan cost and what charges should you look out for?

Let’s find out.

What Is a Bridging Loan?

A bridging loan is a short-term loan that helps you get access to immediate cash until you secure more permanent financing for an existing obligation (for example: buying a property before selling an old one).

What to find out more about bridging loans? See our article on ‘How Bridging Loans work‘.

What Are The Bridging Loan Costs in The UK?

Bridging loans cost varies based on the length of the loan’s term (the longer the term, the pricier the loan), interest rates, and the purpose of the loan. 

Here’s what affects the cost of bridging loans in the UK:

Product fees (arrangement or facility fees)

Nearly all bridging loan lenders will charge you a fee for organising the loan. The fee (also called an arrangement fee or a facility fee) is generally a percentage of the borrowed amount. 

It’s usually around 2% but it can range between 1.5% and 3%. For example, if you need to borrow £100,000, the product fee would be £2000 at 2%.

Broker fees

If you’re not familiar with all the details that go into picking out the right loan or you want to avoid dealing with complex paperwork and negotiating with potential lenders, the best course of action is to get a good broker

Brokers usually charge between 0.5% to 2% on the amount that you’re borrowing, but some work on a flat fee. 

When hiring a broker, avoid those that charge upfront fees. Instead, look for brokers that charge on a success-only basis, meaning they’ll charge you only if they manage to organise the loan. 


When taking out a bridging loan, you should put down money as a deposit on the property.

Most lenders will expect you to pay around 25% of the property’s value and loan you the remaining amount, while some are willing to cover up to 80-85% of the loan-to-value (LTV).

Note that the bridging loan cost-related interest will depend on the money you put down. The higher the deposit, the lower the interest rate.

You could also potentially get a loan to cover 100% of the property’s value, but you’ll have to use another property as a security for the loan. 

Valuation report fees 

Before approving your loan, lenders assess the property that you’re using the loan to buy, in case you fail to pay back the loan and they need to repossess and sell it.

They will also perform a valuation check and report on any properties you’re using to secure the bridging loan. 

The fees for a single valuation vary and usually depend on the size of the property (the bigger-the more expensive). You can expect to pay from £300 to up to £900.

Drawdown fees (assessment or admin fees)

When your loan gets approved, the lender will release the funds to the seller (not the borrower) on a pre-set date. The release of the funds is called a drawdown and incurs a fee that’s paid by the borrower. 

Bridging finance costs related to the drawdown process are around £500.

Redemption fees

The redemption fee is another administrative fee that borrowers pay to lenders to remove the “legal” charge against the property (the loan) 

The fee is usually around 1% or between £100 – £150.

Exit fees

Not all lenders charge exit fees and there’s no penalty for early repayments, but some might charge 1% of the loan once the cost of the bridging loan is repaid. 

The purpose of charging exit fees is to cover certain administrative costs. 

Solicitor fees (legal fees)

As the borrower of the loan, you’ll have to pay the legal fees that your lender incurs while dealing with the loan. 

Transfer fees

Transfer fees cover the bank charges involved in the process of transferring the money to you from the lender or to your conveyancing solicitor. 

The average cost of a bridging loan transfer fee is around £25

When Do You Pay These Fees?

Bridging loan fees can be rolled into the loan and paid at the end of the loan’s term. 

Still, certain bridge loan fees have to be paid upfront, including:

  • Survey/valuation fees.
  • Legal fees.
  • Broker’s fees (depending on the broker).

What Are The Bridging Loan UK Interest Rates?

Interest rates on bridging loans are calculated monthly and can vary from 0.4% to 2%. This means that a loan with a 2% interest will cost 24% over a year.

The amount you pay in interest rates depends on a variety of factors, including:

Loan-to-value ratio

The loan-to-value ratio represents the percentage that the lender pays (lends) towards the purchase of the property. If you put down a bigger deposit, that means the LTV will be lower and you’ll pay less in interest rates.

Amount and length of the loan

The length and the amount of the loan are one of the biggest factors that determine the interest rate. In most cases, shorter-term loans have lower interest rates.

Condition of property

Although the condition of the property won’t play a big role in the lender’s approval decision, it can affect the interest rates. If the property is in a poor condition, you’ll likely have to pay higher interest rates.

Regulated or unregulated loan

Regulated loans, which are regulated by the Financial Conduct Authority (FCA) have lower interest rates, compared to unregulated loans.

Location of the property

Having a property in a popular area usually means lower interest rates because the property is more likely to get sold quickly. 

Your credit history

Having a bad credit score doesn’t mean you can’t access a bridging loan but you will have to pay higher interest rates because lenders will consider you a high-risk borrower. 

How Is Bridging Loan Interest Repaid?

Bridging loans are flexible and there are several repayment options you can choose from, including:


You can choose to repay the interest every month. The cost of your bridge finance will stay the same and you’ll pay it at the end of the term. 

Rolled up (Deferred) 

If you don’t want to pay interest on the loan every month, you can push the interest to the end of the term. The lender will calculate how much interest you owe monthly and you’ll pay it in a lump sum when the term ends.

Retained interest 

Similar to rolled-up interest, a retained interest is paid at the end of the loan’s term. However, instead of being calculated monthly, the lender calculates how much you’ll owe (in interest) over the entire term and adds it to your balance.

If you pay the loan early, the lender will refund the excess you’ve paid in interest.

How To Get a Cheaper Bridging Loan

Bridging loan costs come with high interest rates and fees that can make it an expensive way of borrowing.

Here are some things you can do to make sure you get the best deal possible. 

  • Compare offers: Comparison websites can help you compare offers from lenders and give you an estimate of how much you’ll need to repay, but there’s a possibility they might not include fees and other additional charges.
  • Opt for a secured loan: If you’re buying a new home, but haven’t sold the current one yet, you can get lower interest rates by securing a loan against both properties. 
  • Find a good broker: Your broker will help you find a loan that suits your needs, negotiate with lenders on your behalf, and handle all the paperwork. 
  • Consider a desktop valuation: You could save some money by looking for lenders that are willing to accept a desktop valuation, provided your loan value is less than 50%.

Bottom Line

If you’re wondering “how much does a bridging loan cost?”, the first thing you need to look for is the loan amount and term. Short-term loans usually have lower interest rates, but

the cost of setting up a bridging loan in the UK may rack up, considering there are extra fees to be paid. 

Ultimately,  you can consider some alternatives like remortgaging and buy-to-let mortgage.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.