Authoritative Data Source & Methodology

Primary reference: 12 CFR Part 1026 (Regulation Z — Truth in Lending), cash-flow based APR definition and internal rate of return methodology. Last updated: see eCFR.

All finance math (interest, fees, IRR) follows standard time-value-of-money principles. “Bridge” lending terms vary by lender; this tool lets you parameterize common structures (serviced, retained, rolled-up) and fees.

“Tutti i calcoli si basano rigorosamente sulle formule e sui dati forniti da questa fonte.”

The Formula Explained

For a monthly period loan with gross principal \(L\), monthly rate \(i\), and term \(n\):

Serviced interest payment each month: \[ I_m = L \cdot i \] Retained interest deducted upfront: \[ I_{\text{retained}} = L \cdot i \cdot n \] Rolled-up balance at redemption: \[ B_n = L\,(1+i)^n \] Exit fee (percent of gross loan \(e\%\)): \[ \text{Exit} = L \cdot \frac{e}{100} \] APR is the monthly internal rate of return \(r\) that solves: \[ 0 = -\,\text{NetAdvance} + \sum_{t=1}^{n} \text{Pay}_t\,(1+r)^{-t} + \text{Redemption}\,(1+r)^{-n} \] with annualisation \( \text{APR} = (1+r)^{12} - 1 \).

Glossary of Inputs & Outputs

  • Property Value: Asset value used for LTV checks.
  • Max LTV: Maximum loan-to-value allowed; caps the gross loan.
  • Gross Loan Requested: Loan before deductions or capitalised fees.
  • Monthly Interest Rate: Nominal rate per month.
  • Interest Method:
    • Serviced: pay interest monthly; principal due at term.
    • Retained: total interest for the term deducted upfront.
    • Rolled-up: interest accrues and compounds to term.
  • Arrangement Fee: % of loan; capitalised or paid upfront.
  • Broker/Valuation/Legal Fees: Upfront deductions from the advance.
  • Exit Fee: % of loan added to redemption.
  • Net Advance: Cash received after upfront deductions.
  • Redemption Amount: What you repay at the end (principal, exit fee, plus rolled-up interest if selected).
  • APR (IRR): Cash-flow based annualised rate including timing of payments and fees.

How It Works: A Step-by-Step Example

Inputs: Value \$500,000; LTV 70%; Gross loan \$350,000; Term 12; Monthly rate 0.9%; Method Retained; Arrangement 2% (capitalised); Broker 1.5%; Exit 1%; Valuation \$650; Legal \$1,200.

Compute: Retained interest \(= 350{,}000 \times 0.009 \times 12 = \$37{,}800\) (deducted upfront). Arrangement fee capitalised \(= \$7{,}000\) (not deducted upfront). Upfront deductions = Retained interest + Broker + Valuation + Legal. Net advance = Gross loan − upfront deductions. Redemption = Principal + Exit fee (no monthly payments). APR is the IRR of \([-\,\text{NetAdvance}, 0, \ldots, 0, \text{Redemption}]\) annualised.

FAQ

Is a bridge loan interest rate quoted per month or per year?

Many bridge offers quote a monthly nominal rate (e.g., 0.9%/month). The calculator works directly with a monthly rate for precision.

Does capitalising fees change APR?

Yes. Capitalised fees increase the redemption and typically raise APR compared to paying the same fees upfront.

Can I model partial term early repayment?

This version assumes redemption at maturity. For early payoff, shorten the term to approximate.

What happens if my requested loan breaches LTV?

The tool automatically trims the gross loan to the maximum allowed by LTV for conservative outputs.

Why is APR different from my nominal monthly rate?

APR reflects cash-flow timing and fees; it can be materially higher than the nominal rate when fees are significant or interest is retained.

Do retained and rolled-up produce the same interest?

No. Retained uses linear interest \(L \cdot i \cdot n\); rolled-up compounds \((1+i)^n-1\).

Is taxation considered?

No. Outcomes are pre-tax and for informational purposes only.

Tool developed by Ugo Candido. Content verified by CalcDomain Editorial Board.
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