What is a bridging loan?
A bridging loan is a short-term secured loan used to bridge a temporary funding gap, most commonly in property transactions. They are typically interest-only with the capital repaid at the end of the term when the exit event occurs, such as a property sale or refinance. Bridging loans are more expensive than term loans but can be arranged quickly.
What is rolled-up interest?
Rolled-up interest means you do not make any monthly interest payments. Instead, the interest is added to the loan balance each month and repaid in full at the end of the term alongside the capital. This reduces monthly cash flow pressure but increases the total amount owed because interest compounds on the growing balance.
What is a typical bridging loan rate?
UK bridging loan rates typically range from 0.4% to 1.5% per month, equivalent to approximately 5% to 20% APR. Rates depend on the LTV, the strength of the exit strategy, the property type, and the borrower's profile. Always compare the total cost including arrangement and exit fees, not just the monthly rate.