Bridging loan rates are one of the first questions any borrower asks — and understandably so. But rates alone don't tell the full story. Two lenders quoting the same monthly rate can have dramatically different all-in costs once fees, legal charges, and interest treatment are factored in. This guide breaks down how bridging loan pricing actually works in 2026, what factors move your rate up or down, and how to approach the market to get the most competitive terms for your specific deal.
Unlike mortgages — which quote an annual percentage rate — bridging loan interest is quoted as a monthly rate. A rate of 0.85% per month means you pay 0.85% of the outstanding loan balance each month. On a £500,000 loan, that's £4,250 per month in interest.
Monthly rates are used because bridging loans are short-term by nature — typically 3 to 18 months. Quoting an annual rate would be misleading given most borrowers don't hold the loan for a full year. However, it also means you need to be careful when comparing bridging rates to mortgage rates — a 0.85%/month bridging rate equates to approximately 10.2% per annum, which is significantly higher than a standard mortgage.
💡 Never compare on rate alone. Always ask your broker for the total cost of the facility — interest + arrangement fee + exit fee + legal costs + valuation. The lender with the lowest monthly rate is not always the cheapest option.
| Deal Type | Typical Monthly Rate | Notes |
|---|---|---|
| Regulated residential (owner-occupier) | 0.55% – 0.80% | FCA regulated, tighter criteria, lower risk |
| Standard investment bridging (BTL, refurb) | 0.75% – 0.95% | Most common product type |
| Auction / time-critical purchases | 0.80% – 1.05% | Speed premium can apply |
| HMO bridging | 0.85% – 1.10% | Specialist lenders, licensing required |
| Commercial property bridging | 0.90% – 1.25% | Wider range due to asset complexity |
| Development bridging / heavy refurb | 0.95% – 1.40% | Build risk + staged drawdowns |
| Land without planning permission | 1.00% – 1.50% | High risk, fewer lenders willing |
| Adverse credit borrowers | 1.10% – 1.60% | Specialist lenders only |
These are indicative ranges as of June 2026. Your actual rate will sit within — or potentially outside — these ranges depending on the specific factors covered below.
LTV is the single biggest pricing variable. The lower your LTV, the less risk the lender carries if they need to enforce and sell the property — so they reward you with a lower rate. The difference between 50% LTV and 75% LTV can be 0.20–0.40% per month. On a £1 million loan over 12 months, that's £24,000–£48,000 in additional interest.
Residential property in good condition in an active, liquid market attracts the best rates. The lender is thinking: if this deal goes wrong, how quickly and easily can we sell this property? A 3-bed semi in Manchester or Birmingham is easy to sell. A converted barn in rural Wales, a specialist care facility, or a property above a chip shop is harder — and priced accordingly.
A lender who is confident your exit will materialise on time will price more aggressively. A signed sale agreement or a formal mortgage offer in hand means the exit is virtually certain — lenders compete for these deals. An open exit ("I'll sell it or refinance — not sure yet") carries more uncertainty and commands a premium.
Larger loans typically attract better rates. On a £5 million loan, lenders compete more intensely and the fixed cost of running the deal (legal, valuation, admin) is lower as a percentage of the loan. The sweet spot for the sharpest pricing tends to be loans above £500,000–£1 million. Smaller loans (under £250,000) often carry a slight premium.
Experienced property investors with clean credit, a track record of completed deals, and demonstrable income give lenders confidence. First-time bridging borrowers or those with adverse credit (CCJs, defaults, mortgage arrears) may face higher rates. The key is to present a complete, well-packaged application — lenders price risk partly on the confidence they have in the borrower.
Some lenders offer rate discounts for longer terms (e.g., 12-month versus 3-month deals). The lender has certainty of income for a longer period — which has value. Conversely, very short-term deals (under 3 months) can sometimes attract a minimum interest charge equivalent to 3 months' interest regardless of early repayment.
Different lenders have different risk appetites and capital costs. Challenger banks and large institutional bridging lenders generally price more keenly on vanilla deals. Specialist boutique lenders may be more expensive but willing to look at deals that mainstream bridging lenders decline. A whole-of-market broker matches your deal to the right lender — not just the cheapest lender on a standard deal.
Interest accrues on the loan balance each month and is added to the outstanding balance. You don't pay anything during the loan term — the full interest is repaid at the end when you exit. This preserves cash flow during a refurbishment or development but means the total repayment grows each month as interest compounds.
The lender calculates the total interest for the full loan term and deducts it from the advance upfront. You receive a smaller net advance, but there is no uncertainty about the exit amount — it's fixed from day one. Useful when you want a predictable total repayment figure.
You pay the interest each month, like a mortgage. This keeps the loan balance flat and reduces the total amount repayable — but requires monthly cash outflow, which may not suit all investors. Some lenders offer a lower rate for serviced interest deals as the lender receives regular cash repayments reducing their ongoing exposure.
| Cost Item | Amount |
|---|---|
| Interest (0.90% × 9 months) | £40,500 |
| Arrangement fee (1.75%) | £8,750 |
| Valuation | £900 |
| Legal fees | £3,500 |
| Total cost | £53,650 |
| Total repayable | £553,650 |
| Cost Item | Amount |
|---|---|
| Interest (0.85% × 12 months) | £153,000 |
| Arrangement fee (1.5%) | £22,500 |
| Valuation | £1,800 |
| Legal fees | £5,500 |
| Total cost | £182,800 |
| Total repayable | £1,682,800 |
💡 Note on compounding: In the above examples, interest is shown as simple (rate × months). In reality, rolled-up interest compounds monthly as unpaid interest is added to the loan balance — increasing the effective total slightly. Always ask your broker for a full amortisation schedule showing the exact repayment figure.
Arrangement fees are charged by almost all bridging lenders — typically 1.5–2.0% of the loan amount. They can usually be added to the loan (netted from the advance) rather than paid upfront, though some lenders require payment on application or on completion.
Exit fees — charged when the loan is repaid — are less common but do appear on some products, typically at 0.5–1.0% of the loan. A lender charging 0.80%/month with a 1.0% exit fee has a higher effective cost than a lender charging 0.85%/month with no exit fee on a 6-month loan. Always model the total.
Some lenders also charge a minimum interest period — meaning even if you repay after 2 months, you pay interest equivalent to 3 months minimum. Read the fee schedule carefully before committing.
Regulated bridging loans — where the security property is or will be occupied by the borrower or a close family member — are governed by FCA regulation and typically carry lower rates (0.55–0.80%/month). The regulatory oversight reduces lender risk and the borrower pool is seen as more creditworthy.
Unregulated bridging — which covers most investment, commercial, and development scenarios — is not FCA regulated. Rates are slightly higher but lenders have more flexibility on criteria, speed, and deal structure.
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