What simple interest means on a bridge loan
Simple interest is charged on the loan balance only, never on interest already owed. Each month costs the balance times the annual rate divided by 12, so the total is the balance times the rate times the years. A $200,000 loan at 12% a year is $2,000 in interest every month.
Some lenders defer interest to payoff and compound it monthly, which costs more over the same term. Your loan estimate or term sheet should say which method applies.
Points and closing costs
Bridge lenders usually charge origination points, a percentage of the loan, and closing costs such as appraisal and title fees. Points are normally paid at closing. If your lender adds them to the loan instead, choose Added to the loan: interest is then charged on the larger balance.
Worked example: $200,000 for eight months
You borrow $200,000 for eight months at 12% a year with simple interest paid at payoff. Interest is $2,000.00 a month, or $16,000.00 over the term. Two points paid at closing cost $4,000 and closing costs add $400, so fees are $4,400.00.
The total cost of borrowing is $20,400.00 and the payoff is $216,000.00. If the same loan compounded interest monthly, interest would be $16,571.34, which is $571.34 more.
Simple interest is not an APR
Bridge loans are short, so interest is usually quoted as an annual rate and charged monthly. This page does not calculate an APR. Compare offers on total cost, including points and closing costs, rather than on the interest rate alone.
To compare interest-only, deferred and prepaid interest, use the US swing loan calculator .
If you pay interest every month, use the US interest only bridge loan calculator .
Use the right country page
This page stays in US dollars and uses US terms: bridge loan, an annual rate and origination points. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK simple bridging loan calculator, which uses a monthly rate and an arrangement fee. The inputs reset and amounts are not converted.
Inputs for the simple bridge loan calculator
Amount you need
The loan amount you need. Points added to the loan are on top of this.
Quoted interest rate
The note rate, not the APR. US bridge loans are usually quoted per year.
Rate quoted per
Year (nominal) divides by 12. Choose Month for a monthly rate.
Term
Whole months until you pay the loan off.
When simple interest is paid
At payoff with the loan, or monthly. The interest is the same either way.
Origination fee (points)
One point is 1% of the loan. Choose below whether it is paid separately or added to the loan.
Exit fee
A percentage charged at payoff. Most bridge loans have none.
Other quoted costs
Closing costs or legal fees paid at the start.
CALCULATOR QUESTIONS
US simple bridge loan calculator questions
How do you calculate simple interest on a bridge loan?
Multiply the balance by the annual rate, divide by 12 and multiply by the number of months. $200,000 at 12% for eight months is $16,000.
Is simple interest cheaper than compound interest?
Yes, over the same rate and term, because you never pay interest on interest. In the worked example compounding adds $571.34.
Do all bridge loans use simple interest?
No. Some defer interest and compound it monthly. Check your term sheet to see which method your lender uses.
Do points change the interest?
Only if they are added to the loan, which raises the balance interest is charged on. Points paid at closing add to the cost but not to the interest.
What happens when I change country?
The United Kingdom option opens the separate UK simple bridging loan page, in pounds, with a monthly rate. Your inputs are reset rather than converted.