Bridging loans are flexible and convenient, but as they accrue interest monthly, rather than annually like mortgages, they do come at a cost. The average monthly interest rate on a bridge loan is anywhere between 0.5% and 2% of the total amount borrowed, and there are other fees to consider:
- Arrangement Fee – typically 1-2% of the sum borrowed
- Administration Fee – for the paperwork involved
- Valuation Fee – to cover surveyor valuation costs
- Exit Fee – if you pay back your loan early, your lender may charge an exit fee of up to 1.5%
- Legal Fees – some lenders charge fixed legal fees