What is a bridge loan?

A bridge loan (or bridging finance) is a short-term, interest-only loan that helps you "bridge" the gap between buying a new property and selling your existing one. It is typically repaid in full when your current property sells or when you arrange long-term financing.

How is interest calculated on a bridge loan?

Most bridge loans charge interest-only payments based on the outstanding principal. Monthly interest is usually calculated as principal multiplied by the annual interest rate divided by 12. Some lenders calculate interest daily using a 365- or 360-day year and add it monthly.

Are bridge loan fees added to the loan amount?

Many lenders allow arrangement fees, broker fees, and legal costs to be added to the bridge loan balance instead of being paid upfront. This increases the amount you borrow and therefore the interest you pay. The calculator lets you choose whether fees are financed or paid in cash.

Is a bridge loan interest-only?

Yes, most bridge loans are structured as interest-only. You either make monthly interest payments and repay the principal at the end, or you roll up all interest and repay both principal and interest in a single lump sum when the loan is repaid.

What is a typical term for a bridge loan?

Bridge loans are short-term by design. Common terms are 3 to 12 months, sometimes up to 24 months for more complex projects. The shorter the term, the less total interest you will pay, but you must be confident that your exit strategy (sale or refinance) will complete in time.

Bridge Loan Calculator

Estimate interest-only payments, total interest, lender fees, net cash available, and payoff amount for your bridge (bridging) loan.

1. Scenario type

Simple: enter loan amount directly. Advanced: calculate bridge need from property values and mortgages.

2. Bridge loan amount & term

Bridge loan amount

Interest rate (annual)

Term length

months

3. Fees & interest method

Lender / broker fee (percent of loan)

Additional flat fees

How are fees paid? Interest calculation How is interest paid?

Results

Loan & cash flow

Effective loan amount (including financed fees): $0
Monthly interest-only payment: $0
Total interest over term: $0
Total lender & broker fees: $0

Net proceeds & payoff

Cash required upfront (fees + interest, if any): $0
Net cash available from bridge loan: $0
Estimated payoff amount at end of term: $0

Summary by term

Term	Monthly payment	Total interest	Payoff amount
Run a calculation to see details.

How this bridge loan calculator works

This bridge loan calculator is designed for both home buyers and brokers. It models a typical short-term, interest-only bridge (or bridging) loan and shows:

How much you can borrow based on your equity (advanced mode)
Your monthly interest-only payment
Total interest cost over the term
Lender and broker fees (percentage and flat)
Net cash available after fees
The payoff amount when the bridge loan is repaid

1. Simple vs. advanced bridge scenarios

Use Simple bridge when you already know the bridge loan amount you need. Use Advanced (two properties) to estimate the bridge requirement from:

Current property value and existing mortgage balance
Maximum loan-to-value (LTV) your lender allows on the current property
New property purchase price and your cash down payment
Any additional cash you have available

The calculator first estimates how much you can borrow against your current property:

Maximum bridge on current property

$ \text{Max bridge} = \text{Current value} \times \text{Max LTV} - \text{Existing mortgage} $

It then compares this to the cash needed to complete the new purchase:

Cash needed for purchase

$ \text{Cash needed} = \text{New price} - \text{Down payment} - \text{Other cash} $

The bridge loan amount is the smaller of these two values (never less than zero).

2. Interest-only bridge loan formula

Most bridge loans are interest-only. The monthly interest payment is:

Monthly interest payment

$ \text{Payment} = \text{Principal} \times \dfrac{\text{Annual rate}}{12} $

If interest is calculated daily, the calculator uses:

Daily interest

$ \text{Daily rate} = \dfrac{\text{Annual rate}}{365} $ (or 360)
$ \text{Total interest} = \text{Principal} \times \text{Daily rate} \times \text{Term days} $

3. Fees and effective loan amount

You can enter lender and broker fees as a percentage of the loan and as a flat amount. The total fee is:

Total fees

$ \text{Fees} = \text{Loan} \times \dfrac{\text{Fee \%}}{100} + \text{Flat fee} $

If you choose to finance fees, they are added to the loan balance:

Effective loan amount

$ \text{Effective loan} = \text{Loan} + \text{Fees (financed)} $

If you pay fees in cash, they reduce your net cash available but do not increase the loan balance.

4. Rolled-up vs. monthly interest

The calculator supports two common structures:

Monthly interest-only payments – you pay interest each month, and repay the principal at the end.
Rolled-up interest – no monthly payments; all interest is added to the balance and paid at payoff.

When interest is rolled up, the payoff amount is:

Payoff with rolled-up interest

$ \text{Payoff} = \text{Effective loan} + \text{Total interest} $

With monthly interest-only payments, the payoff is just the effective loan amount (principal plus any financed fees).

When to use a bridge loan

A bridge loan can be useful when:

You want to buy a new home before your current home sells.
You need to complete a purchase quickly (e.g., auction or competitive bidding).
You are renovating or repositioning a property before arranging long-term financing.

However, bridge loans are short-term and relatively expensive. Always have a clear exit strategy (sale or refinance) and stress-test your numbers for delays or lower sale prices.

Limitations & disclaimers

This tool is for educational and planning purposes only and does not constitute financial advice.
Actual lender terms, fees, and eligibility criteria vary by country and institution.
Taxes, legal costs, valuation fees, and early repayment charges are not fully modeled.
Always confirm figures with your lender or a qualified mortgage adviser before committing.