Why bridging loans are repaid by remortgaging
A bridging loan is short-term finance, often at 0.5% to 1% a month. When the works are finished or the property has been let or reached its value, many borrowers repay the bridge with a longer, cheaper term mortgage. The new lender will value the property and lend up to a maximum loan to value, so the bridging balance has to fit within that limit.
The calculator treats the new mortgage as a repayment mortgage over the term you choose, with the annual rate divided by 12 each month. The first thing to check is the loan to value: if the balance is above the lender's limit, the shortfall is the extra cash you would need to find.
The costs of leaving a bridge
Refinancing is not free. You may pay an exit fee to the bridging lender, an arrangement fee on the new mortgage and legal and valuation costs. This calculator adds them up as the one-off costs, then divides them by the interest you save each month to show how long the move takes to pay for itself.
Worked example: refinancing a £320,000 bridge
You owe £320,000 on a bridging loan at 0.85% a month, secured on a property valued at £500,000. A 25-year mortgage at 5.5% repays it, giving a monthly payment of £1,965.08 and a loan to value of 64.0%, within a 75% limit.
The bridge costs £2,720.00 a month in interest, while the first month of mortgage interest is £1,466.67, so you save £1,253.33 a month. The one-off costs are £7,900.00: a 1% mortgage arrangement fee of £3,200, a 1% bridging exit fee of £3,200 and £1,500 for legal and valuation costs. They are recovered in 6.3 months.
What this comparison leaves out
The monthly payment includes capital repayment, so it is not directly comparable with the bridge's interest. The saving shown compares interest only. Lenders also assess affordability, which can limit what you can borrow regardless of the property value. Check the exit fee, any early repayment charge and the full cost of the new mortgage with your broker.
To work out the cost of the bridge itself, use the UK bridging finance calculator .
If you pay the bridge's interest monthly, use the UK interest only bridging loan calculator .
Use the right country page
This page stays in pounds and uses UK terms: remortgage, arrangement fee and a monthly bridging rate. The country choices above the inputs open separate local pages. Choosing United States opens the US refinancing a bridge loan calculator, which uses an annual rate, points and closing costs. The inputs reset and amounts are not converted.
Inputs for the remortgage after bridging loan calculator
Bridging loan balance to repay
What you owe when the new mortgage completes, including any rolled-up interest.
Property value
The new lender's valuation of the property.
Bridging loan rate
The rate you pay on the bridge now, not the APR. UK bridging rates are usually monthly.
Bridge rate quoted per
Month for a monthly rate. Year (nominal) divides an annual rate by 12.
New mortgage rate
The annual rate on the term mortgage, not the APR.
New mortgage term
Years to repay the new mortgage in full.
Mortgage arrangement fee
A percentage of the new loan, paid at completion and not added to the loan.
Bridging exit fee
A percentage of the bridge balance charged when you repay it. Enter zero if none.
Legal and valuation costs
Other one-off costs of the new mortgage.
Lender's maximum loan to value
The most the new lender will lend, as a percentage of the property value.
CALCULATOR QUESTIONS
UK remortgage after bridging loan calculator questions
How do you remortgage after a bridging loan?
A new lender values the property and lends up to its maximum loan to value. The new mortgage repays the bridge, and you then make monthly mortgage payments.
How long does it take to recover the cost of refinancing a bridge?
Divide the one-off costs by the interest you save each month. In the worked example, £7,900 divided by £1,253.33 is 6.3 months.
What if the bridging balance is above the lender's limit?
The calculator shows the shortfall, which is the extra cash you would have to put in or the amount you would need to borrow elsewhere.
Why does the mortgage payment look higher than the bridge interest?
Because it repays capital as well as interest. Compare the interest saved, not just the payments.
What happens when I change country?
The United States option opens the separate US refinancing a bridge loan page, in dollars, with an annual bridge rate and points. Your inputs are reset rather than converted.