Bridging Loan Costs & Fees (UK Guide)
Bridging loans are designed for speed and flexibility — but the headline rate is only part of the story. The true cost is a mix of interest, fees, and timing, and it can change depending on how quickly you repay the loan.
This guide explains the typical costs you’ll see with UK bridging finance, what each cost means, and what to budget for before you commit.
Why the headline rate isn’t the full cost
With bridging finance, the total cost depends on how interest is charged, the term, your loan-to-value (LTV), and how realistic your exit strategy is (sale or refinance). A loan that runs longer than planned usually costs more — even if the rate looked competitive at the start.
The main costs to expect
Most bridging costs fall into these areas:
Interest (rolled-up or serviced)
Arrangement fee
Valuation
Legal fees
Exit fees / minimum terms (where applicable)
Broker fees (case dependent)
Some are paid upfront, some are deducted from the loan, and some depend on how the project progresses.
Interest — rolled-up vs serviced
Rolled-up interest
With rolled-up interest, the interest is added to the loan balance and repaid when you exit (sale or refinance). This can help cashflow during the term, but the balance increases over time.
Serviced interest
With serviced interest, you pay interest monthly. This can reduce the balance build-up, but it requires consistent monthly cashflow.
Arrangement fee
What it is
An arrangement fee is charged by the lender for setting up the facility. It’s often calculated as a percentage of the facility or loan amount.
How it’s paid
It may be paid upfront or deducted from the initial advance. This matters because it affects the cash you actually receive on day one.
Valuation costs
A valuation confirms the property’s current value and helps the lender assess risk. Costs vary by property type, location, and complexity. If you need to complete quickly (for example, an auction timeline), valuation speed can also affect the overall process.
Legal fees
Your solicitor
You’ll usually pay your own solicitor for the legal work, checks, and completion. These legal fees depend on complexity and timescales.
The lender’s solicitor
It’s common for borrowers to cover the lender’s legal costs too, because the lender’s solicitor acts for the lender. This is standard in many bridging transactions.
Loan-to-value (LTV) and security
Pricing and lender appetite often change based on LTV and the security offered. Lower LTV is usually lower risk, which can mean better pricing and more lender options. Higher LTV or non-standard security can increase cost and reduce available lenders.
Exit fees, minimum terms and early repayment
Some facilities include an exit fee, a minimum interest period, or early repayment terms. This matters if you expect a quick sale or refinance — because you may still pay a minimum amount of interest even if you repay early.
What affects the total cost most
These factors usually move the total cost more than anything else:
Time (the longer it runs, the more interest builds)
Speed of exit (sale/refinance delays add cost)
LTV and risk profile (risk affects pricing)
Property type (non-standard can cost more)