Bridging loan fees, explained line by line
Why is my bridging amount higher than I asked for? And which fees are one-off versus ongoing?
If the bridging amount on your quote is bigger than the gap you asked for, this is why. On most bridging facilities the fees are added to the amount being financed, which means you are not just paying the fee — you are paying interest on the fee for as long as you hold the bridge. Understanding which fees behave that way, and which do not, is the difference between comparing two quotes properly and comparing two numbers that were never the same thing.
The fees that commonly get capitalised
| Fee | What it is | Usually interest-bearing? |
|---|---|---|
| Establishment / arrangement fee | Charged to set the facility up. | Often yes, on bridging products. |
| Valuation fee | Independent valuation of the property you are buying. | Frequently rolled in. |
| Legal fees | Documentation and security for the bridging contract. | Varies by lender. |
| Inspection / audit fees | Condition or pest reports the lender requires. | Varies by lender. |
| Discharge fee | Closing out the existing loan on the home you are selling. | Paid to that lender, not to the bridge. |
The last row is the one people double-count. The discharge fee on your existing home loan is a real cost of the move, but it is a cost you incur whether or not you bridge, and it does not sit inside the bridging balance. Put it in your overall budget, not in the bridging amount.
The costs that are not fees at all, but land anyway
Stamp duty on the new purchase, the legal fees for that purchase, building and council fees, and rates — these arrive on the settlement timeline and are frequently the reason a buyer who "had enough for the deposit" cannot actually settle. They are not part of the bridging calculation, and the calculator on this site deliberately does not pretend they are. But they are part of the cash you need on the day, and a bridging facility that leaves you short at settlement is a problem that surfaces at the worst possible moment.
How to compare two bridging quotes properly
- Get the interest-bearing amount, not the requested amount. Ask each lender for the figure interest will be charged on, in writing. That is the only number the daily accrual applies to.
- Get the rate, the day-count convention and the term. A quote without a day-count convention cannot be costed. A quote without a term cannot be risk-priced.
- Separate one-off fees from ongoing ones. Establishment is once. Interest is every day. Do not compare a quote that capitalises fees against one that does not without adjusting.
- Ask what happens on a roll-over. The renewal rate and any renewal fee should be understood before you need them, not after.
Put your real fee numbers in. The calculator has a field for the establishment fee and another for everything else you are carrying, and it treats both as interest-bearing — the common case. If your quote charges them outside the balance, you will see how much cheaper that makes the bridge.