Bridging Loan Calculator

Bridging loans are short-term (typically up to around 12 months, sometimes longer) and priced monthly rather than annually. A 1% monthly rate annualises to about 12% on a simple basis; compounding would make the effective rate a little higher. Plus a 2% arrangement fee on day one. A 200,000 bridge at 1% per month for 6 months, 2% fee: roughly 12,000 interest and 4,000 fee, 16,000 in total.

Run it with sample values

Using loan amount of 200,000, monthly rate of 1%, term of 6, arrangement fee of 2%, the calculation works out to 16,000.00. These example values are a starting point, not a recommendation.

The levers in this calculation

Measured at the sample figures, Loan Amount moves Total Cost of Bridging Loan most, about 1% per 1%, while Arrangement Fee moves it 0.25%. Loan amount scales every part of the cost one-for-one: doubling it doubles the total. Rate and term multiply together on the interest side, which is 12,000 of the 16,000 in the sample figures: each extra month at 1% adds 2,000, while the one-off 2% fee stays 4,000 however long the bridge runs. Short bridges are fee-heavy and long ones interest-heavy; on those figures, interest matches the fee at two months and exceeds it from the third month on.

How the math works

Simple monthly interest (most bridging loans) plus arrangement fee. Interest accrues each month on the original loan amount and is paid at exit rather than serviced monthly; total cost is similar either way.

What the headline rate hides

A monthly quote understates the annual burden: 1% a month is about 12% a year on a simple basis, and closer to 12.7% compounded. The result here already includes the arrangement fee alongside the interest, but valuation, legal, and exit fees sit outside it and vary by lender, so comparing two bridges takes the monthly rate, the fee, and those extras together.

What this doesn't capture

The figure covers interest and the arrangement fee only. Valuation, legal, insurance, and exit fees, plus any early-repayment charge, sit on top and vary by lender. The model also holds the rate fixed, assumes no partial repayments, and treats the term as certain. A delayed exit is the classic way a bridge overruns its quote, because lenders can charge an extension fee or a higher rate beyond the agreed term. The result illustrates the mechanics for comparison, not a binding quote.

Worked example

Suppose you borrow 300,000 at 1.2% monthly for 9 months with a 2.5% arrangement fee:

• Arrangement fee: 300,000 × 2.5% = 7,500 (due upfront)
• Monthly interest over 9 months at 1.2% (simple) = 32,400
• Total cost: 39,900 (interest 32,400 plus fee 7,500); loan plus cost 339,900

The arrangement fee hits your cash immediately. The interest accrues monthly on the original loan amount and is paid at exit.

When this metric matters

Bridging loans appear in property transactions where timing mismatches exist; for example, needing funds before a sale completes or before refinancing closes. The short, high-cost nature means total outlay varies sharply with term length and rate. Comparing two bridge offers requires both the headline monthly rate and the upfront fee structure.