How much does a bridging loan cost? Rates, fees and what you get for your money

Quick answer: in 2026 a UK bridging loan typically costs between 0.55% and 1.25% per month in interest, plus an arrangement fee of 1% to 2% of the loan. With valuation and legal fees added, the all-in cost of a nine month bridge usually sits between 8% and 12% of the amount borrowed. What you get in return is the ability to complete a purchase in days rather than months, buy property a mortgage lender will not touch, and act on deals before anyone else can. Sourced Financial Services lends from its own funds, so you can price a deal in under a minute with our bridging loan calculator (https://sourced.co/bridging-loan-calculator/) and speak directly to the people making the decision.

Why investors use bridging finance

Bridging is short term property finance, usually held for 3 to 12 months and secured against property. It exists because the best opportunities in property rarely wait for a mortgage. Auction purchases have to complete in 28 days. Below market value deals go to whoever can move fastest. Refurbishment projects often involve properties that are unmortgageable until the work is done. Chains break at the worst moment.

In each of those situations bridging turns a deal you would otherwise lose into one you can complete. Our investors typically use it to buy at auction, fund light and heavy refurbishments before refinancing onto a buy to let mortgage, break a chain, or secure a property quickly and then refinance at leisure. The cost is real, but it is the price of certainty and speed, and on the right deal it is comfortably outweighed by the profit the deal generates.

What makes up the cost of a bridging loan?

There are six cost lines on almost every bridging facility. Knowing them means you can compare quotes properly and there are no surprises at completion.

Monthly interest is the biggest line, typically 0.55% to 1.25% per month, either rolled up, retained or paid monthly.

The arrangement fee is 1% to 2% of the gross loan, charged on completion and usually added to the loan rather than paid upfront.

The valuation fee is £500 to £2,000 or more, paid to the surveyor before an offer is issued.

Legal fees run to £1,500 to £3,000 per side, because you pay both the lender’s solicitor and your own.

Some lenders charge an exit or redemption fee when the loan is repaid, either up to 1% of the loan or a flat admin charge of £100 to £250.

A broker fee of up to 1% may apply if you go through a third party broker. Because Sourced lends directly, there is no broker fee on our own facilities.

These are market ranges for mainstream first charge residential and investment bridging in 2026. Specialist, second charge or adverse credit cases price higher. Use the bridging finance calculator (https://sourced.co/bridging-loan-calculator/) to see the figures for your own deal.

Monthly interest: the biggest single cost

Bridging is priced per month, not per year, because you are only holding the loan for a short time. Most 2026 deals sit between 0.65% and 0.95% per month. Clean, low LTV cases with a strong exit are quoted from around 0.5%, and complex or high LTV deals price above 1.2%.

You can structure the interest to suit your cashflow. Rolled up interest accrues each month and is repaid with the loan at the end, so there is nothing to pay while the project is running. Retained interest is deducted from the advance on day one for the expected term, with unused months refunded if you exit early. Serviced interest is paid monthly and is mainly used on regulated loans. For most investors rolled up interest is the natural choice, because it keeps cash in the project rather than in monthly payments.

One thing to watch: the term you actually run to matters more than the rate. A loan at 0.75% held for 12 months costs double one held for 6, so a tight exit plan is the most effective way to keep the cost down. We will help you build that plan before you draw down.

Arrangement, valuation and legal fees

The arrangement fee is normally 1% to 2% of the gross loan and is added to the balance on completion, so it does not need funding from your own pocket. Be wary of lenders advertising no arrangement fee. They usually recover it through a higher monthly rate, so always compare the total cost, not one line of it.

Valuation fees depend on the property. Expect £500 to £2,000 for standard residential and more for commercial, mixed use or development sites. On lower LTV deals we can often use a desktop valuation, which saves both money and days.

Legal fees come in two parts, your solicitor and the lender’s. Budget £1,500 to £3,000 for each side on a straightforward purchase. Dual representation, where one firm acts for both parties, is available on many of our cases and cuts both the cost and the time to completion.

Exit fees and early repayment

Sourced does not believe in penalising investors for doing what bridging is designed for, which is getting out quickly. Check any lender’s exit terms carefully, because a low headline rate with a 1% exit fee can cost more than a slightly higher rate with none. Most bridging loans can be repaid early after a short minimum term, and you stop paying interest for the months you no longer need.

Worked example: what a £300,000 bridging loan costs all in

This example uses mid-market 2026 figures on a nine month first charge investment bridge with rolled up interest. Your own quote will differ, so run your numbers in the bridging loan calculator (https://sourced.co/bridging-loan-calculator/) or call us for a real illustration.

Interest at 0.75% per month for nine months on £300,000 comes to £20,250. A 2% arrangement fee adds £6,000. A residential valuation is around £900. The lender’s legal fees are £1,500 and your own another £1,500. A redemption admin fee of £200 rounds it off. The total cost of borrowing is £30,350, or 10.1% of the loan.

Now put that against the deal. If the £300,000 bridge lets you buy a property at auction for £400,000 that is worth £500,000 once refurbished, refinance onto a buy to let mortgage and pull most of your capital back out, the £30,000 cost of the bridge is what unlocked £100,000 of equity that would not otherwise have been available. That is the calculation that matters.

How the term changes the cost

Because most fees are fixed and interest is monthly, the effective cost falls sharply on a short bridge. Take the same £300,000 loan at 0.75% per month with £10,100 of fixed fees. Held for three months the all-in cost is £16,850, or 5.6% of the loan. At six months it is £23,600, or 7.9%. At nine months it is £30,350, or 10.1%. At twelve months it is £37,100, or 12.4%.

A fast, credible exit is the single biggest lever on cost, which is why we look at your exit as closely as your entry when we price a deal.

What decides the rate you are offered?

Lenders price on risk, and five factors do most of the work. Loan to value comes first: below 60% attracts the best rates, above 70% costs more. Exit strategy is next, with an exchanged sale or a refinance decision in principle priced lower than a speculative exit. Property type and condition matter, with standard residential cheapest and commercial, land, HMOs and heavy refurbishment sitting higher. Second charge bridging typically prices 0.15% to 0.3% per month above first charge. And borrower profile counts: experience, track record and credit history all feed in, though adverse credit is lendable at a premium.

This is where a direct lender makes a difference. Because we underwrite in house, we can look at the whole picture rather than running your deal through a rigid scorecard, and we can tell you quickly and honestly what it will cost.

Is a bridging loan expensive?

Compared with a mortgage on an annualised basis, yes. A 0.75% monthly rate is roughly 9% a year before fees against 4% to 6% on a standard mortgage. But that comparison misses the point. A mortgage will not complete in 10 days, will not lend on a property with no kitchen, and will not let you buy at auction. Bridging is a tool for a specific job, and when the cost of missing the opportunity is higher than the cost of the loan, bridging is the cheaper option by a distance.

How to pay less for bridging finance

Keep the term short and the exit tight, because every extra month is pure interest. Borrow at a lower LTV if you can put more equity in. Compare on total cost of borrowing, not headline rate, and ask every lender for a full cost illustration. Ask about dual legal representation and desktop valuations to trim third party costs. And borrow from a lender that also has whole of market access, so you know the deal in front of you is the right one.

Why borrow from Sourced Financial Services

Sourced Financial Services is both a direct bridging lender and a whole of market broker. If your deal fits our criteria, we fund it from our own money, which means fast decisions, no broker fee and a direct line to the underwriter. If it does not fit, we broker it across the wider market and find the lender who will, so you never need a second conversation.

We are part of the Sourced group, which has helped investors grow their property wealth by over £150m and works with property investors every day through deal sourcing, lettings and development. We understand what you are trying to do with the money because we do it ourselves.

Price your bridging loan today

Every figure in this guide is a range because every deal is different. Our bridging loan calculator (https://sourced.co/bridging-loan-calculator/) lets you enter your loan amount, property value, term and expected rate and see the full cost of borrowing, including arrangement, legal, valuation and exit fees, in seconds.

Ready to talk about a live deal? Call the Sourced Financial Services team on 0333 360 5542 or email [email protected] and we will give you a real quote, usually the same day.

Frequently asked questions

How much does a bridging loan cost per month? Typically 0.55% to 1.25% of the loan amount per month in 2026, with most deals between 0.65% and 0.95%. On £300,000 at 0.75% that is £2,250 a month.

What is the total cost of a £100,000 bridging loan? On a six month term at 0.75% per month with a 2% arrangement fee and around £4,000 of valuation, legal and admin costs, roughly £10,500 all in, or about 10.5% of the loan. Use the calculator for your exact figures.

Do you pay a bridging loan back monthly? Usually not. Most bridging loans roll up or retain the interest so there are no monthly payments, and the full balance is repaid when you sell or refinance.

How quickly can a bridging loan complete? With a direct lender and dual legal representation, straightforward cases can complete in 7 to 14 days. Auction purchases with a 28 day deadline are routine.

What is the APR on a bridging loan? Lenders quote monthly rates, but a 0.75% monthly rate equates to roughly 9% a year before fees, and often 11% to 13% once arrangement and other fees are included over a typical term.

Are there hidden fees on bridging loans? Not hidden, but easily missed. Arrangement fees, lender legal fees, exit or redemption fees and valuation costs all sit outside the headline rate. Always ask for a full cost of borrowing illustration.

Can I repay a bridging loan early? Yes, in most cases, after a short minimum term, and you stop paying interest for the unused months. Check the offer for any early repayment charge.

How much can I borrow on a bridging loan? Usually up to 70% to 75% of the property value on a first charge, sometimes higher against gross development value on refurbishment or development bridges. Rolled or retained interest reduces the net amount you receive.