£4 Million Bridging Loan Costs Explained – Interest Rates, Fees & Real Examples
Bridging loans can be a flexible and fast way to access large sums of money when time is of the essence, particularly in property transactions.
Whether you’re purchasing before a sale, renovating for resale, or unlocking capital for business or investment purposes, a bridging loan can offer a valuable short-term solution for the right borrowers that understand the risk.
But what does it actually cost?
We’ll break down the typical costs of borrowing £4 million through a bridging loan and help you understand the key factors that influence the price.
If you’re considering a bridging loan, the team at Kerr & Watson are here to offer tailored advice and help you secure products with trusted lenders.
The Basics of Bridging Loan Costs
A bridging loan is usually charged monthly rather than annually, as it’s intended for short-term use, typically between 3 and 12 months. The two main costs to consider are:
- Interest (usually charged monthly)
- Fees (set-up, legal, valuation and exit fees)
Let’s explore each one using a £4,000,000 loan as our example.
Average Interest Rates on a £4 Million Bridging Loan
Bridging loan rates vary based on the lender, your experience, the loan-to-value (LTV), and the property itself (residential, commercial, or land). At the time of writing in 2025, typical rates for standard residential bridging loans range between:
- 0.55% – 0.95% per month
For a £4,000,000 loan, here’s what that looks like:
| Monthly Interest Rate | Monthly Cost | 12-Month Interest Total |
| 0.55% | £22,000 | £264,000 |
| 0.75% | £30,000 | £360,000 |
| 0.95% | £38,000 | £456,000 |
Some lenders offer rolled interest, meaning the interest is added to the loan and repaid at the end, rather than paid monthly.
Others may prefer monthly servicing, where you pay interest each month and repay the loan amount at the end.
Find out Your Options
Common Bridging Loan Fees
In addition to interest, you’ll typically face a number of one-off fees:
Arrangement Fee
Charged by the lender for setting up the loan and often rolled into the gross loan.
- Typically 1–2% of the loan amount
- On £4,000,000: £40,000 to £80,000
Valuation Fee
The lender will require an independent valuation of the property.
- £1,000–£3,000, depending on the property type and location, with the lender often requesting a number of quotes for the borrower to choose one.
Legal Fees
Both you and the lender will need legal representation. Some solicitors may be able to act for both parties but this is not always acceptable to the lender.
- £1,500–£5,000, depending on complexity
Exit Fee (Sometimes)
Not all lenders charge this, but if they do, could potentially be:
- 1% of the loan = £40,000
Broker Fee
If you’re working through a broker, a broker fee may apply, but at Kerr & Watson this is clearly outlined from the start.
Total Estimated Cost of a £4,000,000 Bridging Loan (12 Months)
Here’s an example based on some potential figures:
- Loan amount: £4,000,000
- Interest at 0.75% monthly: £360,000
- Arrangement fee (1.5%): £60,000
- Valuation and legal fees: £5,000
- Total cost: £420,000–£430,000 (approx.)
In this instance, the gross loan would be approx. £4,430,000 which is the amount to be paid back after 12 months (or less if sooner). The net loan is the amount that is released to you. In this instance, £4,000,000.
These costs could be higher or lower depending on your circumstances, property type, and lender. If you do not keep the loan for the full 12 months, the costs will be lower.
Likewise, if you go beyond the agreed term, this will result in more costs. To find out what the numbers would look like for your specific circumstances, get in touch.
Factors That Affect the Cost
A number of elements will influence how much your bridging loan ultimately costs:
- Loan-to-value (LTV) – Lower LTVs can unlock better rates
- Property type – Residential is often cheaper than commercial or land and the condition of the property may affect the cost
- Location – Some lenders have regional preferences or limitations
- Exit strategy – Lenders want a clear plan for repayment (sale, refinance, etc.)
- Borrower profile – Experience, credit history, and financial stability all count
Is a Bridging Loan Right for You?
A bridging loan can be a powerful financial tool, but it’s not for everyone. These loans may be suitable when:
- You need fast access to capital
- You have a clear exit strategy in place
- You’re bridging a short-term funding gap (e.g. buying before selling)
- You’re developing or flipping a property for resale
At Kerr & Watson, we’ll take time to understand your project and goals before recommending the most appropriate lender and structure. If a bridging loan is not the best solution, we will tell you.
Get Bridging Loan Advice Today
At Kerr & Watson, we work with a wide panel of bridging lenders. We pride ourselves on offering a transparent, and personalised service from start to finish.
Whether you’re purchasing, refinancing, developing, or restructuring, we can help you:
Speak to us today for a no-obligation consultation based on your specific scenario.
