What simple interest means on a bridging loan
Simple interest is charged on the loan balance only, never on interest already owed. Each month costs the balance multiplied by the monthly rate, so the total is the balance times the rate times the number of months. A £304,500 loan at 0.9% a month is £2,740.50 in interest every month, whatever happened in the months before.
Many UK bridging lenders instead roll interest up and compound it monthly, which costs more over the same term. Your quote should say which method applies, so check before you compare lenders.
Fees added to the loan
If the arrangement fee is added to the loan, interest is charged on it too, so the balance is higher than the cash you receive. Exit fees and other costs are calculated on the cash you receive and shown separately. Choose Paid separately or Added to the loan to match your offer.
Worked example: £300,000 for nine months
You need £300,000 for nine months at 0.9% a month with simple interest paid at the end. A 1.5% arrangement fee of £4,500 is added to the loan, making the balance £304,500. Interest is £2,740.50 a month, or £24,664.50 over the term.
A 1% exit fee of £3,000 and £1,200 of legal costs bring fees to £8,700.00, so the total cost of borrowing is £33,364.50 and you repay £332,164.50 at the end. If the same loan compounded interest monthly, interest would be £25,571.32, which is £906.82 more.
Simple interest is not the same as a flat-rate APR
Bridging rates are monthly and the term is short, so the quoted monthly rate is the real cost of the interest. This page does not calculate an APR. Compare quotes on total cost, including fees, rather than on the headline rate alone.
To compare serviced, retained, rolled-up and deferred interest, use the UK bridging finance calculator .
If you will pay the interest every month, use the UK interest only bridging loan calculator .
Use the right country page
This page stays in pounds and uses UK terms: bridging loan, a monthly rate and an arrangement fee. The country choices above the inputs open separate local pages. Choosing United States opens the US simple bridge loan calculator, which uses an annual rate and points. The inputs reset and amounts are not converted.
Inputs for the simple bridging loan calculator
Amount you need
The cash you need to receive. A fee added to the loan is on top of this.
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.
Term
Whole months until you repay the loan.
When simple interest is paid
At the end with the loan, or monthly. The interest is the same either way.
Arrangement fee
A percentage of the cash you receive. Choose below whether it is paid separately or added to the loan.
Exit fee
A percentage of the cash you receive, paid when you repay. Enter zero if none.
Other quoted costs
Legal or valuation costs paid at the start.
CALCULATOR QUESTIONS
UK simple bridging loan calculator questions
How do you calculate simple interest on a bridging loan?
Multiply the loan balance by the monthly rate and by the number of months. £304,500 at 0.9% a month for nine months is £24,664.50.
Is simple interest cheaper than compound interest?
Yes, over the same term and rate, because you never pay interest on interest. In the worked example compounding adds £906.82.
Do all bridging lenders charge simple interest?
No. Many roll interest up and compound it monthly. Your quote should say whether interest is simple or compound.
Why is the loan balance higher than the amount I need?
Because the arrangement fee is added to the loan. Interest is then charged on the larger balance.
What happens when I change country?
The United States option opens the separate US simple bridge loan page, in dollars, with an annual rate and points. Your inputs are reset rather than converted.