Bridging loans are fast and flexible, but they come with a range of fees that borrowers need to understand, especially when speed is essential and exits are time-sensitive.

This guide breaks down every cost involved in a UK bridging loan, how lenders structure fees, where borrowers often get caught out, and how to calculate the true cost of short-term finance.

What Are Bridging Loan Fees?

Bridging loan fees are the costs charged by lenders, brokers, surveyors, and solicitors to set up, maintain and repay a bridging loan.

They include:

• Interest (retained, serviced or rolled up)

• Arrangement fees

• Valuation fees

• Legal fees

• Exit fees

• Admin and completion fees

• Broker fees (where applicable)

Unlike long-term mortgages, bridging loans front-load most costs because they’re designed for speed rather than long-term affordability.

1. Interest: Rolled Up, Retained or Serviced

Interest is the most significant cost in a bridging loan, usually charged monthly, not annually.

Typical UK bridging rates (2025):
0.75% – 1.25% per month depending on LTV, asset type and borrower profile.

Three ways interest can be structured:

Rolled-Up Interest

Interest accumulates and is repaid at the end.
Most common for investors and refurb deals.

Retained Interest

Lender deducts all interest upfront from the loan.
Good for borrowers with no monthly income.

Serviced Interest

Borrower pays interest monthly.
More common in regulated cases.

What this means for borrowers:
The headline rate doesn’t tell the whole story — the structure matters.

2. Arrangement (Facility) Fee

Almost all lenders charge an arrangement fee of:

1% – 2% of the loan amount

Example:
Loan: £400,000
Arrangement fee (2%): £8,000

This fee is often added to the loan, not paid upfront.

3. Valuation Fees

Lenders require a valuation to confirm security value.
Costs depend on the valuation type:

• AVM: £10–£30

• Desktop valuation: £95–£200

• Full RICS valuation: £300–£2,500+

• Commercial/specialist valuations: £1,500–£10,000+

Factors affecting cost:

• Location

• Property type

• Property size

• Purpose (standard, refurb, development exit, GDV)

A new valuation may be required for:

• Rebridging

• Major changes to condition

• Expired valuations

4. Legal Fees (Borrower + Lender)

Bridging loans require dual representation — a solicitor for the borrower and one for the lender.

Typical fees:

• Borrower’s legal fees: £1,000–£2,000+

• Lender’s legal fees: £900–£1,800+

• Heavy refurb or commercial cases: £3,000–£7,000+

Borrowers must also cover:

• Priority search fees

• Company searches

• Land Registry fees

• Undertakings for fast completions

Key point:
Legal fees are often higher for bridging than mortgages due to speed and complexity.

5. Exit Fee

Some lenders charge an exit fee when the loan is repaid.

Common structures:

• 1% of the loan amount

• 1% of GDV (mainly development exits)

• No exit fee (many lenders use this as a selling point)

Borrowers should always check if the exit fee is:

• Based on the loan amount

• Based on the gross loan amount

• Based on GDV

It makes a big difference.

6. Broker Fees

Some bridging brokers charge fees; others do not.

Typical UK market:
0% – 2% of the loan amount

Complex commercial or high-LTV cases often attract higher broker fees.

If a broker is FCA-regulated and the loan is regulated, fees must be disclosed under MCD rules.

7. Administration & Other Lender Fees

These are smaller fees that appear in many offers:

• Assessment fee

• Drawdown fee

• Telegraphic transfer fee (TT fee)

• Redemption fee

• Deeds release fee

• Re-inspection fee (post-refurb)

• Extension fee (if more time needed)

None of these are usually huge individually — but they add up.

8. Early Repayment Charges (ERCs)

Most bridging lenders do not charge ERCs.
However, many have:

• A minimum interest period (e.g., 1–3 months)

• A minimum fee even if repaid early

Borrowers should check if:

• Early repayment is allowed anytime

• Minimum months of interest still apply

• Fees change after the minimum period

9. Total Cost Example (Worked Calculation)

Scenario

• Loan: £300,000

• Term: 9 months

• Rate: 0.95% per month rolled up

• Arrangement fee: 2%

• Valuation: £600

• Legal fees: £1,800

• Exit fee: 1%

• TT/admin fees: £75

• Broker fee: 1%

Calculation

Interest:
0.95% × 9 months = 8.55%
£300,000 × 8.55% = £25,650

Arrangement fee (2%): £6,000
Exit fee (1%): £3,000
Valuation: £600
Legal fees: £1,800
Broker fee: £3,000
Admin fees: £75

Total cost of loan:

£40,125

This is why the structure of the loan matters as much as the rate.

Where Borrowers Often Get Caught Out

• Assuming the headline interest rate is the total cost

• Not factoring in lender legal fees

• Forgetting exit fees based on GDV

• Underestimating valuation costs on commercial deals

• Not planning for extension fees if exit is delayed

How to Reduce Bridging Loan Costs

Borrowers can often save thousands by:

• Choosing the right valuation type (AVM/desktop when possible)

• Securing a lower LTV

• Using a broker with lender access

• Preparing documents early to avoid delays

• Ensuring the exit strategy is strong to improve pricing

FAQs – Bridging Loan Fees

Are bridging loan fees expensive?
They can be, because they front-load costs for fast, flexible short-term lending.

Is there always an arrangement fee?
Almost always — expect 1–2%.

Do all lenders charge an exit fee?
No — many lenders have no exit fee at all.

Can I add fees to the loan?
Many fees can be added, but legal fees and valuation fees are normally paid upfront.

Do all bridging lenders charge broker fees?
Broker fees depend on the broker, not the lender.

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