What a rent deposit is, and why people bridge it
On many commercial leases the landlord asks the tenant to lodge a rent deposit, often three to six months of rent, held as security until the tenant has built up a track record or the lease ends. For a new business or a company taking on a larger unit, that is a lot of cash to tie up, so some tenants borrow it on a short-term bridging loan.
The deposit is calculated from the rent: £60,000 a year is £5,000 a month, so six months of rent is a £30,000 deposit. This calculator works that out for you, then prices a loan for that amount using the same bridging maths as the main bridging page.
Interest, fees and how the loan is repaid
Bridging lenders usually quote a monthly rate. Interest can be rolled up and compounded until you repay, deducted up front, deferred or paid monthly. If the arrangement fee is added to the loan, you pay interest on it too. Choose the options that match your quote.
The loan lasts as long as the landlord holds the deposit, or until you refinance. The longer the term, the more of the deposit's value you pay away in interest, so the calculator also shows the total cost as a share of the deposit.
Worked example: a six-month deposit on £60,000 rent
A lease with £60,000 annual rent asks for a six-month deposit, which is £30,000. You borrow it for 12 months at 0.95% a month, with interest rolled up and compounded, and a 2% arrangement fee of £600 added to the loan, so the loan balance is £30,600.
Interest is £3,676.57 and fees including £1,000 of legal costs are £1,600.00, so the total cost of borrowing the deposit is £5,276.57, or 17.6% of the deposit. You repay £34,276.57 at the end.
Alternatives and limits
A rent guarantee or deposit bond, a personal guarantee, or a reduced deposit may cost less than borrowing the full amount, so ask your landlord what they will accept. This calculator assumes the deposit is returned in full at the end and does not include any interest the landlord pays on it. It does not apply VAT to rent or deposits; check the position for your lease.
To compare interest methods on any bridging loan, use the UK bridging finance calculator .
If you will pay the interest monthly, use the UK interest only bridging loan calculator .
Use the right country page
This page stays in pounds and uses UK terms: annual rent, a rent deposit and a monthly bridging rate. The country choices above the inputs open separate local pages. Choosing United States opens the US security deposit bridge loan calculator, which uses monthly rent, an annual rate and points. The inputs reset and amounts are not converted.
Inputs for the rent deposit bridging loan calculator
Annual rent
The rent in your lease, before any service charge. Switch the period if you know the monthly figure.
Rent quoted per
Year if the rent figure is annual, Month if it is monthly.
Rent deposit
How many months of rent the landlord asks you to lodge.
Quoted interest rate
The rate in your offer, not the APR. UK bridging rates are usually monthly.
Rate quoted per
Month for a monthly rate. Year (nominal) divides an annual rate by 12.
Time the deposit is tied up
Whole months until the deposit is released or you repay the loan.
How interest is paid
Compound or simple interest paid at the end, retained up front, or serviced monthly.
Arrangement fee
A percentage of the deposit. Choose below whether it is paid separately or added to the loan.
Exit fee
A percentage payable when you repay. Enter zero if none.
Other quoted costs
Legal or valuation costs paid at the start.
CALCULATOR QUESTIONS
UK rent deposit bridging loan calculator questions
How much is a rent deposit?
It is set in the lease, usually three to six months of rent. £60,000 a year is £5,000 a month, so six months is £30,000.
Can you get a bridging loan for a rent deposit?
Some lenders will fund a rent deposit, usually against other security. Terms vary, so use the calculator with the rate and fees from a real quote.
Do I get the deposit back?
Normally yes, at the end of the lease or sooner if the landlord agrees. This calculator assumes it is returned in full and does not count any interest the landlord pays.
Why is the cost so high compared with the deposit?
Bridging loans are short-term, with monthly rates and fees, so a year can cost a large share of a small loan. A guarantee or bond may cost less.
What happens when I change country?
The United States option opens the separate US security deposit bridge loan page, in dollars, with monthly rent and an annual rate. Your inputs are reset rather than converted.