How Much Does a £200,000 Bridging Loan Actually Cost?

November 3, 2026

How Much Does a £200,000 Bridging Loan Cost?

The cost of a £200,000 bridging loan depends on several factors, including the interest rate, loan term, property value, security available and the lender’s charging structure.

For example, a £200,000 bridging loan with an illustrative interest rate of 0.74% per month would generate £1,480 in monthly interest, assuming interest is calculated on the original loan amount.

Over six months, that would amount to £8,880 in interest before any additional fees.

The example below shows how these costs could look in practice.

£200,000 Bridging Loan: Six-Month Worked Example

Let’s assume a property investor requires £200,000 in bridging finance for six months to purchase an investment property.

For this example, we’ll use an illustrative monthly interest rate of 0.74% and a lender arrangement fee of 2%.

Gross bridging loan: £200,000
Monthly interest rate: 0.74%
Loan term: 6 months
Monthly interest: £1,480
Total interest over six months: £8,880
Lender arrangement fee (2%): £4,000

Total interest and arrangement fee: £12,880

This is an illustrative example, not a lender quotation. It assumes simple interest on a constant £200,000 balance, with no compounding. Valuation fees, legal fees, broker fees and any other applicable charges are excluded. Actual rates, fees and repayment amounts will depend on the lender and the structure of the loan.

In this scenario, the interest and lender arrangement fee would total £12,880 over six months.

However, the amount of money the borrower actually receives and the amount required to repay the loan will depend on how the interest and fees are handled.

How Is Interest Calculated on a Bridging Loan?

Unlike many traditional mortgages, bridging loans commonly charge interest monthly rather than quoting an annual mortgage rate.

For example, an interest rate of 0.74% per month on £200,000 produces an initial monthly interest cost of £1,480.

There are three common ways bridging lenders may structure interest payments.

Serviced Interest

With a serviced bridging loan, the borrower pays the interest each month rather than allowing it to accumulate.

Using our £200,000 example, this would mean paying £1,480 per month for six months, assuming the balance and interest rate remain unchanged.

Over the six-month term, the borrower would pay £8,880 in interest, with the original £200,000 capital balance due for repayment at the end.

This structure may suit borrowers who have sufficient income or cash flow to meet the monthly payments and want to avoid interest building up throughout the loan term.

However, not every lender offers serviced interest, and the borrower will generally need to demonstrate that the payments are affordable.

Rolled-Up Interest

With rolled-up interest, the borrower does not make monthly interest payments.

Instead, interest accrues during the loan term and is repaid alongside the capital when the bridging loan is redeemed.

Using our example, six months of simple interest would amount to £8,880, meaning £208,880 would be payable at the end of the term before accounting for fees and other charges.

Some lenders compound rolled-up interest, meaning interest is charged on previously accrued interest. This would increase the total repayment amount.

Rolled-up interest can be useful for property investors and developers who do not want to make monthly payments while completing a project or waiting for a property sale.

However, it is important to understand how the interest is calculated and how much will ultimately need to be repaid.

Retained Interest

With retained interest, the lender calculates an agreed amount of interest at the beginning of the loan and sets it aside from the gross facility.

This reduces the amount initially released to the borrower.

For example, if £8,880 of interest and a £4,000 arrangement fee were deducted from a £200,000 gross facility, the initial advance would be £187,120 before other costs.

The borrower would still need to repay the £200,000 gross facility at the end of the term, assuming the retained interest covered the full period and no additional charges arose.

Retained interest can provide certainty over the amount allocated for interest during the agreed term, although the treatment of unused retained interest following early repayment varies between lenders.

The distinction between the gross loan and the amount actually received is particularly important when arranging finance for a property purchase.

What Other Fees Are Involved in a £200,000 Bridging Loan?

The interest rate is only one part of the overall cost.

Depending on the lender and transaction, additional charges may include:

Lender Arrangement Fees

Many bridging lenders charge an arrangement fee, often calculated as a percentage of the loan.

A 2% arrangement fee on £200,000 would be £4,000.

The fee may be deducted from the advance, added to the borrowing or paid separately, depending on the lender’s terms.

Valuation Fees

A lender may require a professional valuation of the property being offered as security.

The cost will depend on factors such as the property type, location, value and complexity.

Some lenders may offer alternative valuation arrangements in suitable circumstances.

Legal Fees

Legal work is generally required to complete a bridging loan.

Borrowers may need to cover their own solicitor’s fees as well as the lender’s legal costs.

These can vary considerably depending on the transaction and whether additional properties or complex ownership structures are involved.

Broker Fees

Some specialist finance brokers charge a fee for arranging bridging finance.

Any applicable broker fee should be explained before the borrower commits to proceeding.

Exit Fees and Other Charges

Some bridging loans include exit fees or other charges associated with repayment.

There may also be additional costs if the loan needs to be extended or is not repaid on the agreed date.

This is why comparing bridging loans solely on their monthly interest rate can be misleading.

How Does the Loan Term Affect the Cost?

The longer a bridging loan remains outstanding, the more interest may be payable.

Using the same £200,000 loan and illustrative monthly interest rate of 0.74%, the interest costs could look like this:

3 months: £4,440 interest
6 months: £8,880 interest
9 months: £13,320 interest
12 months: £17,760 interest

These figures assume simple interest on an unchanged £200,000 balance and exclude fees. They do not account for compounding, minimum interest periods or other lender-specific conditions.

This highlights why having a realistic repayment strategy is so important.

For example, an investor planning to sell a refurbished property after six months should consider whether the proposed works, marketing period and sale process can realistically be completed within that timeframe.

If the project takes longer than expected, the additional interest and any extension charges could affect the overall profitability of the investment.

What Affects the Interest Rate on a £200,000 Bridging Loan?

Not every borrower will qualify for the same interest rate.

Bridging lenders assess each application based on the property, security and proposed transaction.

Factors that can influence pricing include:

Loan-to-value (LTV): The amount borrowed compared with the value of the property being used as security.
Property type and condition: Residential, commercial, semi-commercial and properties requiring refurbishment may be assessed differently.
First or second charge security: Whether the lender takes the primary legal charge or a charge behind an existing mortgage.
Repayment strategy: How the borrower intends to repay the loan.
Borrower experience: Particularly where the finance relates to property investment or development.
Additional security: Whether other properties can be offered to support the borrowing.

In some circumstances, offering additional property security may help a borrower access a different funding structure.

A specialist broker can assess these factors and identify lenders whose criteria fit the proposed transaction.

Can You Borrow £200,000 Without Receiving the Full Amount?

Yes.

One of the most important distinctions in bridging finance is the difference between the gross loan and the net advance.

The gross loan is the total facility agreed with the lender.

The net advance is the amount actually released after any fees or retained interest have been deducted.

For example, a £200,000 gross facility may not provide £200,000 in usable funds.

If you need exactly £200,000 to complete a property purchase, the facility may need to be structured differently to ensure sufficient funds are available.

That could involve a larger gross facility, subject to the lender’s loan-to-value limits and other applicable criteria, or paying certain costs separately.

At GPS Financial, we look at the amount you actually need to complete the transaction, rather than simply focusing on the headline loan figure.

Is a Cheaper Bridging Loan Always Better?

Not necessarily.

A lender advertising a lower monthly interest rate may charge higher arrangement fees or offer a structure that is less suitable for the transaction.

Other considerations include:

How quickly the lender can complete.
Whether the property meets its lending criteria.
How interest is calculated and charged.
Whether early repayment is permitted without additional charges.
The lender’s requirements for the proposed exit strategy.
Whether the borrower will receive enough net funds.

For a time-sensitive property purchase, the ability to complete within the required timeframe may be just as important as the interest rate.

The aim should be to find suitable finance at a competitive overall cost, rather than simply choosing the lowest advertised rate.

How Do You Repay a £200,000 Bridging Loan?

Bridging finance is intended to be a short-term funding solution, so lenders generally require a credible repayment strategy from the outset.

Common repayment methods include:

Selling the Property

A borrower may intend to sell the property once refurbishment works are complete or market conditions allow.

The sale proceeds are then used to repay the bridging loan.

Refinancing onto a Mortgage

An investor may use bridging finance to purchase or refurbish a property before refinancing onto a longer-term buy-to-let mortgage.

The proposed refinancing must be realistic, taking into account the property’s condition, value, rental income and the criteria of the intended mortgage lender.

Repayment from Another Property Sale

Some borrowers use bridging finance while waiting for an existing property to sell.

This can be particularly relevant where a property purchase needs to proceed before the sale of another property has completed.

Our guide to buying a house before selling yours using chain break bridging finance explains how this can work.

Whatever the proposed exit, it should be assessed carefully before the borrowing is arranged.

Why Use a Specialist Bridging Finance Broker?

Bridging finance is a specialist area of property lending, and different lenders can have significantly different criteria, pricing structures and requirements.

Some specialist lenders distribute their products through intermediaries rather than accepting applications directly from borrowers.

At GPS Financial, we help property investors, landlords and developers navigate these options.

We can help you:

Understand the borrowing available against your property.
Compare suitable lending options and their overall costs.
Establish the net funds available after deductions.
Assess the proposed repayment strategy.
Navigate the application, valuation and legal process.
Identify potential issues before they delay completion.

Whether you’re purchasing an investment property, funding refurbishment works or arranging finance against an existing asset, we’ll help you understand the available options.

Frequently Asked Questions

How much is the monthly interest on a £200,000 bridging loan?

At an illustrative interest rate of 0.74% per month, the interest on £200,000 would initially be £1,480 per month. The actual amount depends on the lender, interest calculation method and loan structure.

How much would a £200,000 bridging loan cost over six months?

Using a simple interest rate of 0.74% per month, the interest would be £8,880 over six months. Adding an illustrative 2% lender arrangement fee brings the subtotal to £12,880, excluding other fees and charges.

Do you have to make monthly payments on a bridging loan?

Not always. Depending on the lender, interest may be serviced monthly, rolled up and repaid at redemption, or retained at the outset.

Can I repay a bridging loan early?

Many bridging lenders allow early repayment, although some impose minimum interest periods or other charges. The terms should be checked before entering into the agreement.

How much deposit do I need for a £200,000 bridging loan?

The amount of deposit or equity required depends on the lender’s maximum loan-to-value ratio, the property valuation and the overall security available. Some transactions can be structured using equity in additional properties rather than relying solely on a cash deposit.

Can I get a £200,000 bridging loan for a property that needs renovation?

Potentially, yes. Bridging finance is commonly used for properties requiring refurbishment, including some properties that may not currently qualify for a traditional mortgage. The lender will assess the property’s condition, proposed works and repayment strategy.

Need a £200,000 Bridging Loan?

If you’re considering a £200,000 bridging loan, understanding the full cost is just as important as securing the funding itself.

At GPS Financial, we arrange specialist property finance for investors, landlords and developers across the UK.

We’ll review your requirements, assess suitable lending options and explain the costs and repayment considerations before you decide how to proceed.

Speak to GPS Financial about your bridging finance requirements.

Call 029 2267 7707 or enquire online to discuss your options.