Bridging is quoted as a monthly rate, and that single number is the most misleading figure in short-term property finance. A lender says "0.75% a month" and the borrower hears something cheap. The reality is a rate that compounds, a stack of fixed fees that do not shrink with the term, and an advance that reaches your account smaller than the loan you signed for. This page explains what a bridging loan actually costs, what moves the rate you are offered, and how to work out the true cost over the term, using ranges and drivers rather than a live rate table.
What this page is and is not. This is education, not a rate quote and not an invitation to enter into any credit agreement. We do not compare live deals, arrange finance or connect you to a lender. Every figure below is an indicative range as at July 2026 and moves constantly, so confirm current pricing with a lender or an FCA-authorised broker before you budget. We cover unregulated, business-purpose bridging on investment, commercial and development property only. A bridge secured on your own home is a regulated product outside the scope of this guide (see the section on regulated bridging below).
Why bridging is quoted per month, not per year
A residential or commercial term mortgage is quoted as an annual rate because it runs for years. Bridging is short-term finance, typically taken for a few months up to around 18 to 24 months, so lenders quote it monthly to match how it is used. The number looks small precisely because it is a monthly figure, and that is where borrowers trip up.
Convert before you compare. A rate of 0.8% a month is roughly 9.6% a year on a simple basis, and higher once it compounds. Against a term mortgage priced at a few percent a year, bridging is expensive money, which is the point: you pay a premium for speed and flexibility on an asset or a deal that a mainstream lender will not touch quickly. The monthly rate is only defensible when the bridge is genuinely short and the exit is certain. The longer it runs, the worse the arithmetic gets.
Typical bridging loan rate ranges, and what moves them
There is no single "bridging loan rate". Pricing is set deal by deal, and the same borrower can be quoted very different numbers by different lenders on the same asset. As a broad guide, first-charge bridging secured on investment or commercial property typically sits in a range of roughly 0.55% to just over 1% per month as at July 2026, with second-charge and higher-risk cases priced above that. The Bridging & Development Lenders Association and the quarterly Bridging Trends data track how these averages move; treat any figure you read, including this one, as a snapshot to be re-checked.
What decides where in the range you land:
- Charge position. A first charge is the cheapest. A second charge sits behind an existing lender and is priced higher for the extra risk.
- Loan-to-value. A lower LTV is lower risk and attracts a lower rate. Push toward the lender's maximum and the rate rises.
- Security quality and type. A standard let flat or a solid commercial unit prices better than bare land, a part-built site, an unusual title or a property with legal or structural issues.
- The exit. Lenders underwrite the exit, not just the asset. A clean, evidenced exit (an agreed sale, a term-mortgage offer, a development take-out) supports a keener rate. A vague exit pushes the price up or kills the deal.
- Experience. A borrower with a track record of similar deals is a safer bet than a first-timer and is often priced accordingly.
- The wider rate environment. Most bridging is a fixed monthly rate set by the lender rather than tracked to a reference rate, but the Bank of England base rate and SONIA drive lenders' cost of funds, so new-deal pricing firms and softens with the market.
Rolled, retained and serviced: three ways to pay the interest
How the interest is paid changes both your monthly cash flow and the total cost. There are three mechanisms, and the choice is often dictated by the security rather than by preference.
- Serviced. You pay the interest monthly from your own cash flow, exactly like a normal loan. The full advance reaches you, and the loan balance does not grow. This suits an income-producing asset that can cover the payments.
- Retained. The lender holds back the whole term's interest from the advance on day one. You make no monthly payments, but you receive less cash up front. If you repay early, the unused retained interest is usually refunded, so ask how the rebate works.
- Rolled (or compounded). The interest is added to the loan each month and settled in full when you redeem. You pay nothing monthly, but you pay interest on interest, so this is the most expensive option. Bare land and empty property, which produce no rent, are almost always rolled or retained because there is no income to service the debt.
The practical point: a headline monthly rate on a rolled facility understates the true cost, because compounding lifts the effective rate above the simple figure. When you compare two quotes, check they are on the same interest basis before you decide which is cheaper.
Gross loan vs net loan: why the money in your account is less
This is the single most misunderstood mechanic in bridging, so it is worth being precise. The gross loan is the full facility figure the lender sanctions and against which loan-to-value is measured. The net loan, or net advance, is what actually reaches you after retained or rolled interest and the deductible fees are taken from the top.
On a serviced deal the two are close, because interest is paid monthly rather than deducted up front. On a retained or rolled deal the gap can be several percent of the loan. Draw a £200,000 gross facility with interest rolled and a 2% arrangement fee, and the money in your account can be closer to £180,000 once the rolled interest and deductible costs come off. Size the facility around the net you actually need, not the headline gross, or the deal falls short at completion.
The full fee stack beyond the rate
The monthly rate is the headline; the fees are the fine print. Over a short term they matter more than the rate itself, because they are fixed costs that do not shrink when the loan runs for only a few months. Expect some or all of the following:
| Cost | Typical level (as at July 2026, verify) | Notes |
|---|---|---|
| Arrangement / facility fee | ~1% to 2% of the loan | Usually deducted from the advance. The single largest fee on most bridges. |
| Valuation fee | Varies with property type and value | Higher for commercial, land or unusual security; some lenders use automated or desktop valuations on simpler cases. |
| Lender legal costs | Charged at cost | You usually pay the lender's solicitor as well as your own. |
| Your solicitor | Charged at cost | Dual representation, where one firm acts for both, can save time and cost on straightforward deals. |
| Telegraphic transfer / admin | Small fixed sum | Per drawdown in some cases. |
| Broker fee | Varies, if a broker is used | Charged by the broker, not the lender; ask up front. |
| Exit / redemption fee | Often ~1% of the loan or one month's interest, where charged | Not on every product. Some replace it with a minimum-interest term. |
Second charge and regulated bridging: why they cost more
Two situations sit outside the standard first-charge investment bridge and carry a cost premium.
Second-charge bridging sits behind an existing first-charge lender. If the security is sold or repossessed, the second-charge lender is paid only after the first is cleared, so the risk is higher and the rate reflects it, usually with a lower maximum LTV. A second charge also needs the first-charge lender's consent to a further charge, which some will refuse. It can be a sensible way to raise short-term capital without disturbing a good first-charge rate, but budget for the premium.
Regulated bridging is a separate world, and here the compliance line matters. A bridge is a regulated mortgage contract, broadly, when it is secured on a property that you or an immediate family member occupy or intend to occupy as a home. Those loans fall under the FCA's regime and can only be arranged through an FCA-authorised firm, and they price differently. This guide does not cover them. If your bridge would be secured on your own home, for example to break a residential chain on the house you live in, it is a regulated product and outside the scope of this page. Speak to an FCA-authorised mortgage adviser. Everything here concerns unregulated, business-purpose bridging on investment, commercial and development property.
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Worked example: the true cost of a £200,000 bridge over 8 months
Numbers make the point that a monthly rate cannot. Take a first-charge investment bridge of £200,000 gross, at 0.8% per month, over an eight-month term, with interest rolled. These are illustrative figures for teaching, not a quote.
| Component | Basis | Amount |
|---|---|---|
| Rolled interest | 0.8% per month compounded on £200,000 over 8 months | ~£13,160 |
| Arrangement fee | 2% of the gross loan | £4,000 |
| Valuation | Investment property, indicative | ~£900 |
| Legal costs (lender + borrower) | Indicative | ~£2,000 |
| Admin / telegraphic transfer | Fixed | ~£150 |
| Exit fee | 1% of the loan, where charged | £2,000 |
| Total cost of the bridge | Over 8 months | ~£22,210 |
That is roughly 11% of the loan in cost over eight months. Annualise it and the effective cost runs well into the mid-teens as a percentage, against a headline the borrower first read as "0.8% a month". Two forces drive the gap. The fees, about £9,050 here, are fixed and land whether the loan lasts one month or eight, so spreading them over a short term inflates the annualised figure. And the rolled interest compounds, charging interest on interest.
Notice the cash position too. Of the £200,000 gross facility, the rolled interest and the deductible fees (roughly £13,160 + £4,000 + £900 + £2,000 + £150) come off the top, so about £179,790 actually reaches the account; the £2,000 exit fee is paid on redemption. The borrower signed for £200,000 and received close to £180,000. That is the gross-versus-net lesson in one line, and it is why you size a bridge around the net you need.
The tax angle: is the interest deductible?
The interest on a bridge is a real cost, and whether you get tax relief on it changes the true cost materially. The answer turns on the purpose of the borrowing and how the property is held, and this is where the finance question meets the tax question.
In outline: interest on borrowing for a genuine property business can be an allowable finance cost, but an individual residential landlord faces the Section 24 restriction, which gives relief as a basic-rate tax reducer (worth 20% for 2026/27, rising to 22% from 2027/28) rather than a full deduction against profit. Companies are outside Section 24 and relieve interest through the loan-relationship rules. Commercial property interest is not caught by the residential restriction at all. The arrangement fee and other incidental costs of obtaining the finance may also be relievable. For a flip or a trade, the treatment differs again, because interest can be part of the cost of the trade rather than a rental expense.
We do not re-derive the tax decision here. We explain the finance mechanics; the detailed tax treatment lives in our dedicated guides. See is bridging loan interest tax deductible for the full analysis, and finance costs under Section 24 for how residential interest relief actually works. If you want the tax side costed properly before you commit to a bridge, that is exactly the kind of review we do.
Where this sits, and the tools to run your numbers
This is the cost page in a wider set. For how bridging works end to end (charges, terms, exit, risks), start with the bridging loans guide. To understand the market you are borrowing from rather than the price, see bridging loan lenders, which explains the types of lender without recommending any. And to model a specific facility, the bridging loan calculator lets you estimate interest, fees and the net advance on your own figures.
The through-line on this page is simple. The monthly rate is a starting point, not the cost. Add the fees, account for the interest basis, work out the net advance, and convert the whole thing to a total cost over your actual term. Then, and only then, you know what the money costs. And because part of that cost may come back through tax relief, the tax treatment belongs in the calculation from the beginning.
Sources and further reading
- Financial Services and Markets Act 2000, section 21 (restriction on financial promotion) · legislation.gov.uk.
- FCA PERG 8 (financial promotion and section 21).
- Bank of England Bank Rate (the reference rate that drives lenders' cost of funds) · verify the current rate.
- Bridging & Development Lenders Association (BDLA) · market standards and data.
- HMRC BIM45650 (interest and incidental costs of loan finance).
- HMRC PIM2054 (residential property finance costs and the restriction).
Education only. This page does not promote or arrange any credit product, and the ranges above are indicative as at July 2026. Confirm current pricing with a lender or FCA-authorised broker. Regulated bridging secured on your own home is outside its scope.