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Can You Give an Example of a Bridging Loan?

Need a bridging loan example?

If you’re considering a bridging loan, it might be helpful to see an example of a typical finance deal, with a breakdown of the costs and charges.

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A Typical Example is as Follows:

Assuming a bridging loan of £300,000 is required, here’s what you should expect to pay.

Property Sale Price £800,000
Total Amount of Bridging Finance £300,000
Typical Monthly Interest (at 1.5%) £4,500 pm
Typical Arrangement Fee £4500
Typical Exit Fee £4,500

Typical Monthly Interest

Assuming an average rate of 1.5%, you would pay £4500 per month in interest repayments.

Meeting Payments with Retained Interest Bridging Loans

Some bridging loans facilitate borrowers making payments more easily by keeping the interest until the end. This means that a 12 month bridging loan for £300,000, using retained interest, you would pay £54,000 at the end of the loan term.

These type of loans are ideal for borrowers who have a clear exit strategy in mind but cash flow problems in the interim. 

Example Bridging Loan Arrangement Fees

Using an average of 1%, arrangement fees for a 300k bridging loan could total another £4500

Exit Fees Example

Some lenders charge exit fees, which are generally about 1%, or another £4500 in the example given.

Valuation Fees Example

Property Valuation fees are not covered by this example. An average property company might charge around £750 to value a £500,000 property.

Typical Legal Fees for Bridging Finance

Again, these will vary widely depending on the type of legal firm you are using. You should expect a fee of at least £2000 for legal services provided in setting up a bridging loan.