Bridging loans tend to come up when time is tight. You’ve spotted a property, your current place hasn’t sold, or an auction deadline or exchange date won’t wait for your mortgage to come through. A broker mentions a bridge, the amount looks like it covers what you need, and suddenly you’re weighing up whether to commit.
A lender will tell you what they can offer, and a broker can tailor that to your exact situation. Before you get to that stage, a quick check of your own numbers will show you whether the deal stacks up, and it comes down to three figures most borrowers gloss over too quickly. Get those right and you’ll walk into any broker conversation knowing exactly what you need the deal to deliver.
The Three Numbers That Actually Matter
- Gross LTV comes first. Lenders don’t simply divide your loan by the property value and leave it there. They roll in arrangement fees, admin charges, and any interest you’re not paying monthly, all of which inflate your outstanding balance. So a loan that starts out at 65% LTV can quietly drift past 70% once everything’s added on, which can move you into a different rate band. Knowing your true gross LTV early will mean no surprises when the formal valuation comes back.
- Total cost of borrowing is the second number you need to pin down. Monthly rates typically fall between 0.5% and 1.5%, and the percentage applies to the whole facility balance, financed fees included, so factor that in from the start.
Run a £250,000 net bridge over twelve months with rolled-up interest and you’re looking at roughly £17,000 in interest, about £5,000 in lender fees added to the loan, and another £2,500 or so in broker and legal costs paid separately. That’s close to £25,000 before you touch the capital. The full redemption figure will tell you far more than the headline rate.
- Exit strategy confidence is the third. Your exit is how you’ll clear the bridge, whether that’s selling a property, completing a remortgage, or receiving funds from another source. A house already under offer with a completion date locked in? Strong exit. A house that hasn’t been listed yet is a weaker one, so getting it on the market early will strengthen your application and often your rate too.
Run the Numbers Before You Apply
You should have a solid grip on the costs before you go anywhere near a lender. Rolled-up interest and fees added to the balance make the real cost tricky to work out on the back of an envelope, especially once gross LTV starts affecting your rate band.
Run your figures through a bridging loans calculator and it’ll model the interest, fees and gross LTV together, with no credit check involved at that stage. It gives you a quick, indicative summary of the costs at a glance, so you can take a realistic picture of the deal to a broker, who’ll then provide a personalised quote based on your exact scenario.
Put in the loan amount, the property value, and how long you think you’ll need the bridge for, then check the redemption balance at the end. Does the deal you’re funding still make money after that cost is factored in? If the answer is yes with room to spare, you’re in a strong position. Bridging works best with a little margin built in, since property deals can take a few weeks longer than planned, and that buffer is what lets you proceed with confidence.
A Few Things to Double-Check Before You Commit
Even when the headline numbers look good, a few points deserve a second look. Checking them now will make your application smoother and often the loan cheaper.
- You’re stretching to the maximum term because the shorter one looks too tight. If six months looks tight, pricing the loan over twelve from the start will give you genuine breathing room. Interest is normally charged only for the months the loan is actually outstanding, so a longer term doesn’t automatically cost more. Just check the projected gross LTV at the full term, since that’s the figure that sets your rate band.
- Your exit relies on a sale that hasn’t started yet. If the property hasn’t been listed or valued recently, sort that before you apply. A live listing and a fresh valuation will turn a vague exit into one lenders can price with confidence.
- The fees feel small as a percentage but not as a figure. A 2% arrangement fee on a £300,000 loan comes to £6,000. That gets added to your balance too, so include it when you work out the interest for the full term of the bridge.
The Real Test Is Whether You’d Still Do the Deal
Add up every cost: interest, arrangement fees, broker and legal charges, valuation fees, and anything else attached to the transaction. Then ask a blunt question: is this still worth doing after all of that? If the answer is yes and you’ve got a bit of headroom, the bridge is doing its job. If the margin looks thin, treat that as a cue to adjust the term, the loan size or the exit before you apply. The loan is secured on property, so you want an exit date you can genuinely hit, and building in headroom is how you make sure of that.
Borrowers who come out the other side in good shape almost always have one thing in common: they ran the figures properly before they signed anything, and they made sure the maths still worked even if things dragged on a few weeks longer than expected. The pressure of a time-sensitive property deal can push you towards a quick yes, but taking a day to prepare won’t slow anything down. Preparation is what turns a bridging loan into a calculated, confident move.
