The costs of bridging finance are split into two elements, fees and interest.

The up-front costs of a bridging loan consist of a valuation fee and legal fees. These fees will need to be paid to a prospective lender before an application will be pursued to ensure the lenders costs are covered, e.g. where a surveyors valuation does not meet expectations and the loan application does not proceed, then the lender does not expect to be left out of pocket.

Next there will be an arrangement fee, that will usually be between 1% & 2% of the loan required that can be deducted from the loan advance.

Interest on the outstanding loan balance will be in the range 1% to 2% per month. Rates tend to be lower where the "loan to value" required is lower.

In some cases an exit fee can be charged which could be 1% of the loan or a payment equivalent to one months interest.

Actual interest rates & costs vary between bridging lenders and your actual requirements / circumstances. As brokers we are always happy to offer a free bridging loan quote.