Bridging cost calculator
Compare what a bridging loan actually costs under the three interest treatments, retained, rolled and serviced, and see how an early redemption changes each one.
A bridging loan can charge interest in three different ways, and the way it is structured changes what the loan costs you. Retained interest is held back from the loan on day one for the full term, with the unused months refunded if you redeem early. Rolled interest is added to the balance each month and compounds, then settled in full when the loan repays. Serviced interest is paid in cash every month, keeping the balance flat. On a development exit bridge, where the aim is to relieve cash flow while units sell, lenders usually retain or roll rather than expect monthly payments. Enter your figures below to see all three side by side at your expected redemption month.
Many exit bridges carry no exit fee. Leave it at 0 to model that, or enter a quoted figure. Indicative only, not an offer of finance.
| At redemption | Retained | Rolled | Serviced |
|---|---|---|---|
| Interest cost | £0 | £0 | £0 |
| Fees (arrangement + exit) | £0 | £0 | £0 |
| Total cost of credit | £0 | £0 | £0 |
| Net day-one advance | £0 | £0 | £0 |
Retained interest is deducted for the full term on day one and the unused months are refunded at redemption. Rolled interest compounds monthly and settles at redemption. Serviced interest is paid monthly, so the net advance is not reduced by interest. Figures are indicative and not financial advice.
How the bridging cost calculation works
- Retained interest = gross loan × monthly rate × term, held back on day one. At an early redemption the refund is gross loan × rate × the months not used, so the cost shown is the retained figure less that refund.
- Rolled interest = gross loan × ((1 + monthly rate) to the power of the redemption month, less 1). It compounds because each month is charged on the previous month's grown balance.
- Serviced interest = gross loan × monthly rate × the redemption month, paid in cash as you go with no compounding and no retention.
- Fees = the arrangement fee and any exit fee, each a percentage of the gross loan, added to the interest to give the total cost of credit.
- Net day-one advance = the gross loan minus the arrangement fee, minus (on the retained option only) the interest held back. Rolled and serviced do not reduce the day-one advance because their interest is settled later or monthly.
The three columns use the same rate and term, so any difference is down to how the interest is treated and when you redeem. On a typical development exit the retained option tends to look best on an early sale because the refund gives money back, while serviced can be cheapest of all if you can fund the monthly payments in cash. The full product sits on our page at /solutions/bridging-loan-to-repay-development-finance/ if you want the context behind the numbers.
Bridging cost calculator: common questions
Why does retained interest give a refund when I redeem early?
On a retained facility the lender holds back the interest for the whole term on day one, so the money is already accounted for before a single unit sells. When you redeem before the end of the term, the months you never used were never earned by the lender, so the unused portion is returned to you at redemption. The refund is the monthly interest multiplied by the number of months left. It is the single biggest reason an early sale on a retained bridge often costs less than the sticker figure suggests.
Is rolled interest more expensive than retained interest?
Usually yes, because rolled interest compounds. Each month the unpaid interest is added to the balance and the next month is charged on the larger figure, so the cost grows faster than a flat monthly charge. On a short exit bridge the gap is small, but over a longer hold it widens. Retained interest is charged on the original balance for the term and then partly refunded on an early exit, which is why many exit bridges use it. The calculator shows both side by side so you can see the difference for your own numbers.
What does serviced interest mean, and when does it make sense?
Serviced interest means you pay the monthly interest in cash as it falls due rather than letting the lender retain or roll it. It suits a borrower with income from other sources or from early unit sales, because it keeps the outstanding balance flat and avoids compounding. The trade off is that you need the monthly cash to hand throughout the term. On a development exit, where the point is usually to relieve cash flow while units sell, most developers retain or roll instead, but serviced can be the cheapest route if you can comfortably fund it.
Do exit bridges really charge no exit fee?
Many do not, but it varies by lender and it is never safe to assume. Some lenders price an exit fee of one to two percent of the loan or of the gross development value, others charge nothing and recover their margin through the monthly rate and the arrangement fee. Because the structure differs so much, the total cost of credit matters more than any single line. Set the exit fee to zero to model a no-exit-fee bridge, or enter the figure a lender has quoted to see the full cost. All figures here are indicative and not an offer of finance.
Does this calculator tell me the real cost of my bridge?
It gives you a grounded indicative figure, not a quote. The real cost depends on the valuation, the lender, the property type, the leverage and how the interest is actually structured, all of which are settled at underwriting. Use the tool to compare the three interest treatments and to arrive at a sensible expectation before you speak to us. Send us the scheme and the desk will price it against live lender appetite and reply with an indicative range.
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Learn more →Want the real cost of your bridge?
Send us the scheme, the loan and your expected exit month and the desk will price it against live lender appetite and reply with an indicative range by the next working day.