Bridging loan rates and costs
What unregulated bridging typically costs in England right now, what drives the price up or down, and the fees that catch people out.
Typical rates by deal type
| Deal | Rate per month | Max LTV | Arrangement fee |
|---|---|---|---|
| Residential investment, light or no works | 0.55% to 0.85% | 75% | 2% |
| Auction purchase, residential | 0.6% to 0.9% | 75% | 2% |
| Heavy refurbishment or conversion | 0.75% to 1.1% | 70% of purchase, up to 70% of end value | 2% |
| Development exit | 0.55% to 0.85% | 70% to 75% | 1% to 2% |
| Semi-commercial (shop with flats) | 0.7% to 1% | 70% | 2% |
| Commercial | 0.8% to 1.2% | 60% to 70% | 2% |
| Land with planning | 0.85% to 1.25% | 50% to 65% | 2% |
| Second charge | 0.85% to 1.25% | 65% to 70% combined | 2% |
| Large loans, £3m+ | 0.5% to 0.8% | Case by case | 1% to 2% |
About the numbers on this page. Rates, fees and loan-to-values are typical market ranges for unregulated bridging in England, given so you can size a deal. They are not an offer. Your terms depend on the property, the exit, the lender and you.
What moves the rate
- Loan-to-value. The single biggest factor. Drop from 75% to 60% and the rate can fall by 0.2% a month or more.
- Property type. A house in Surrey prices better than a vacant pub in the Midlands, because the exit is more certain.
- Location. London and the South East attract the most lenders and the keenest pricing. Some lenders cap LTV or decline entirely in parts of the North.
- Exit. A refinance with a decision in principle in hand, or a sale already agreed, gets better terms than "I'll sell it".
- Your track record. Experienced borrowers get more leverage and lower rates. Adverse credit does not stop a bridge but it narrows the field.
- Loan size. Larger loans are priced more finely; very small loans (under £150,000) carry minimum fees that make them proportionately expensive.
The full list of costs
| Cost | Typical | When paid |
|---|---|---|
| Interest | 0.55% to 1.25% per month | Retained from the loan, rolled up, or monthly |
| Lender arrangement fee | 1.5% to 2% of the loan | Deducted on completion |
| Valuation | From a few hundred pounds; scales with value | Up front, on instruction |
| Lender's legal fees | Often £1,000 to £3,000+ on straightforward deals; more on complex security | Up front or on completion |
| Your own solicitor | Varies | On completion |
| Exit fee | Usually none; some lenders 1% | On redemption |
| Broker fee | Agreed in writing before anything is instructed | On completion, from the loan |
| Extension fee | If the loan runs over term | Avoidable: borrow for longer than you need |
A worked example
A developer buys a tired three-bed house in Reading at auction for £420,000, spends £60,000 on it and expects to refinance on to a buy-to-let mortgage at £560,000 in nine months.
- Gross loan at 70% of purchase: £294,000, plus a works facility of £60,000 drawn in stages. Call it £354,000 gross.
- Rate 0.8% per month, 9 months retained: interest £25,488.
- Arrangement fee 2%: £7,080.
- Valuation and lender legals: say £3,500.
- Net cash towards the purchase on day one: about £258,000, so the developer needs roughly £162,000 of their own money plus stamp duty and their own costs.
- Total cost of the bridge: around £36,000, or about 10% of the gross loan for the nine months.
Whether that is worth paying depends on the profit in the deal. On this one, buying at auction was the only way to get the house at £420,000, and the refinance repays the bridge with the uplift intact. That is what bridging is for.
Questions about cost
Why is bridging quoted per month and not per year?
Because loans run for months, not years, and because it makes the headline look smaller. 0.85% a month is 10.2% a year before fees. Always compare the total cost of the loan for your actual term, which is what our calculator shows.
Do I pay interest on the retained interest?
With most lenders, no: retained interest is simple interest deducted up front. A few lenders compound rolled-up interest monthly, which adds a small amount over a long term. We tell you which is which.
Is there a fee if I repay early?
Usually not, beyond any minimum interest period (commonly one to three months). Unused retained interest is normally refunded on redemption. Some lenders charge an exit fee of around 1%; we avoid them unless the rate more than compensates.
What does a valuation cost?
It depends on the property value and type. A standard residential valuation might be a few hundred pounds; a large commercial building or a block can run to several thousand. Some lenders accept desktop or automated valuations on straightforward residential property, which saves both money and a week.
Can the fees be added to the loan?
The arrangement fee is almost always deducted from the loan rather than paid in cash. Valuation and legal fees are paid as you go. Our fee is normally paid from the loan on completion.
Tell us the deal.
A few numbers and a postcode is enough for a first view. Indicative terms cost nothing and commit you to nothing.