What a bridge actually costs
Borrowers compare monthly rates. Lenders compete on monthly rates. Almost nobody adds up the arrangement fee, the retained interest, both sets of legals and the exit fee, which on a short term cost more than the rate does. This works all of it out, including the number that matters most: what actually reaches your account.
Net advance
£436,000
58.1% of the security value
Gross loan
£500,000
66.7% of the security value
Where the money goes
The whole cost of borrowing
Redemption at term
£500,000
Effective annual cost
14.7%
Total cost, annualised, against the money you actually receive
| Month | Redemption | Interest to date | Cost to date |
|---|---|---|---|
| 1 | £500,000 | £4,250 | £17,250 |
| 2 | £500,000 | £8,500 | £21,500 |
| 3 | £500,000 | £12,750 | £25,750 |
| 4 | £500,000 | £17,000 | £30,000 |
| 5 | £500,000 | £21,250 | £34,250 |
| 6 | £500,000 | £25,500 | £38,500 |
| 7 | £500,000 | £29,750 | £42,750 |
| 8 | £500,000 | £34,000 | £47,000 |
| 9 | £500,000 | £38,250 | £51,250 |
| 10 | £500,000 | £42,500 | £55,500 |
| 11 | £500,000 | £46,750 | £59,750 |
| 12 | £500,000 | £51,000 | £64,000 |
This is an illustration, not a quote. It is arithmetic on the figures you entered, not an offer, and no lender has seen it. Real pricing depends on the security, the exit, your experience and the lender's appetite that week.
It assumes the arrangement fee is charged once on the gross loan, that retained interest is simple rather than compounded, that rolled up interest compounds monthly, and that no default interest or extension fee applies. Extensions typically cost a further 0.5% to 1% of the gross loan.
Your property may be repossessed if you do not keep up repayments on a loan secured against it.