£5 Million Bridging Loan Costs Explained – Interest Rates, Fees & Real Examples
Bridging loans can provide a fast and flexible way to access large sums of money when timing is crucial — particularly in high-value property transactions.
Whether you’re buying before selling, funding a refurbishment, or releasing capital for business or investment purposes, a bridging loan can offer a valuable short-term solution for borrowers who understand the associated risks and rewards.
But what does a £5 million bridging loan actually cost?
Understanding the Cost of a Bridging Loan
Bridging loans are designed for short-term use typically 3 to 12 months and interest is usually charged monthly rather than annually.
There are two main cost components to consider:
- Interest – charged monthly
- Fees – such as arrangement, legal, valuation, and exit fees
Let’s explore how these apply to a £5,000,000 loan example.
Average Interest Rates on a £5 Million Bridging Loan
Interest rates depend on the lender, the property type (residential, commercial, or land), the loan-to-value (LTV) ratio, and your financial profile or experience.
As of 2025, typical residential bridging loan rates range between:
- 0.55% and 0.95% per month
For a £5,000,000 loan, that equates to £27,500–£47,500 in monthly interest, depending on your specific circumstances.
| Monthly Interest Rate | Monthly Cost | 12-Month Interest Total |
| 0.55% | £27,500 | £330,000 |
| 0.75% | £37,500 | £450,000 |
| 0.95% | £47,500 | £570,000 |
Some lenders offer rolled-up interest, where the interest accrues and is repaid at the end of the term. Others prefer monthly servicing, where interest is paid monthly, and the capital is repaid on completion.
Find out Your Options
Common Bridging Loan Fees
Alongside interest, you’ll encounter a few one-off fees as part of the setup:
Arrangement Fee
Charged by the lender for setting up the loan, often added to the gross loan.
- Typically 1–2% of the loan amount
- On £5,000,000: £50,000–£100,000
Valuation Fee
An independent property valuation is required by the lender.
- Usually £1,000–£3,000, depending on property type and location.
Legal Fees
Both borrower and lender require legal representation. Some solicitors can act for both, but this is not always accepted by lenders.
- Typically £1,500–£5,000, depending on complexity.
Exit Fee
Not all lenders charge one, but when they do, it’s often:
- 1% of the loan amount = £50,000
Broker Fee
If you’re using a broker, a fee may apply. At Kerr & Watson, all fees are clearly explained upfront so you know exactly what to expect.
Total Estimated Cost of a £5,000,000 Bridging Loan (12 Months)
Here’s a practical example of potential costs over a 12-month term:
- Loan amount: £5,000,000
- Interest at 0.75% monthly: £450,000
- Arrangement fee (1.5%): £75,000
- Valuation and legal fees: £5,000
- Total estimated cost: £530,000–£540,000 (approx.)
In this example, the gross loan (the total repayable amount) after 12 months would be around £5,540,000, while the net loan the funds released to you would be £5,000,000.
If you repay the loan earlier, your total costs will likely be lower. However, extending beyond the agreed term will increase your costs.
To see how these figures might look for your specific scenario, get in touch with Kerr & Watson for a personalised breakdown.
Key Factors That Influence the Cost
A range of elements will determine how much your bridging loan costs overall:
- Loan-to-Value (LTV): Lower LTVs can unlock more competitive rates.
- Property Type: Residential properties usually attract lower rates than commercial or land.
- Location: Some lenders have regional preferences or restrictions.
- Exit Strategy: A clear repayment plan (sale or refinance) is essential.
- Borrower Profile: Your experience, credit history, and financial strength all matter.
Is a Bridging Loan Right for You?
Bridging loans can be an excellent short-term funding option, but they’re not suitable for every borrower. They may be appropriate when:
- You need fast access to significant capital.
- You have a clear and credible exit strategy.
- You’re bridging a short-term funding gap (e.g. buying before selling).
- You’re developing or refurbishing property for resale.
At Kerr & Watson, we take the time to understand your goals and structure the most suitable solution. If a bridging loan isn’t the right fit, we’ll tell you and help you explore better alternatives.
Get Bridging Loan Advice Today
At Kerr & Watson, we work with a wide panel of reputable bridging lenders, providing clear, transparent, and personalised advice every step of the way.
Whether you’re purchasing, refinancing, developing, or restructuring, we can help you secure the right funding quickly and efficiently.
Contact us today for a no-obligation consultation and find out what your £5 million bridging loan could look like with tailored advice from the experts at Kerr & Watson.
