Quick answer
The cost of a business bridging loan is made up of the lender's charges for the money over the term plus fees such as establishment, valuation, legal and discharge costs. Those costs can be paid monthly, prepaid at settlement, or added to the loan and repaid at the exit. The most useful way to compare bridges is the estimated total dollar cost over a realistic term, including buffer.
Key points
- Compare bridges on total dollar cost over a realistic term
- Costs can be paid monthly, prepaid or added to the loan
- Costs added to the loan increase peak debt
- A longer term costs more, but an unplanned extension can cost more still
- Cost components
- Charges for the money plus fees
- Payment options
- Monthly, prepaid or added to loan
- Best comparison
- Total dollars over the realistic term
- Pricing
- Set on each borrower's circumstances
You’ll notice we don’t publish rates. That’s deliberate. Every bridge is priced on the security, the exit, the term, the amount and the business behind it, so a headline figure would be misleading for most people who read it. What we can do is explain what goes into the cost, how it’s paid, and how to compare one bridge with another on the number that actually matters: dollars.
What makes up the cost of a bridge?
Think of it in two parts.
Charges for the money. What the lender charges for providing the funds over the term. This is the part most people focus on, and it depends heavily on risk: the equity headroom, the strength of the exit, and the position of the security.
Fees. One-off costs that sit around the loan. Typical ones include:
| Fee | What it covers |
|---|---|
| Establishment or application | Assessing and setting up the loan |
| Valuation | An independent valuation of the security property |
| Lender’s legal costs | Preparing loan and security documents |
| Registration and searches | Title searches and registering the mortgage or caveat |
| Discharge | Removing the security when the loan is repaid |
There may also be costs on your side that belong in the same budget, such as your own lawyer and, for a purchase, transfer (stamp) duty. Duty is set by each state’s revenue office, for example Revenue NSW, and it often dwarfs the loan fees.
How can bridging costs be paid?
There are three common approaches, and they change your numbers in different ways.
- Paid monthly. You pay as you go from cash flow. Peak debt stays lower, but you need the cash during the bridge.
- Prepaid. An amount is set aside at settlement to cover costs for the term. Cash flow is untouched during the bridge, but you receive less from the loan up front.
- Capitalised (added to the loan). Costs are added to the balance and repaid at the exit. Cash flow is untouched, but peak debt rises and the exit has to cover more.
Capitalising is common in bridging because the exit is expected to repay everything in one go. Just make sure the numbers still work with the costs included. In our bridging calculator you can enter an estimated total cost of finance in dollars, and it’s added to peak debt as if capitalised.
If you’d like help working out what your bridge might cost in total, you can ask for an estimate on your actual situation.
How should you compare two bridges?
Put both offers on the same page and compare:
- Total estimated cost in dollars over the term you actually expect to need, plus buffer.
- What happens if the exit is late. Is there an extension option? On what terms? What if you need a month or two more?
- Early repayment. If the exit comes early, can you repay without penalty? Is any prepaid amount refunded?
- Peak debt with costs included. Does the structure still leave headroom?
- Speed and certainty. A slightly more expensive bridge that settles on time can be worth more than a cheaper one that misses your deadline.
The cheapest bridge on paper is not always the cheapest bridge in practice. An extension negotiated under pressure, or a missed settlement with penalties, can cost far more than the difference between two offers.
Why does the term matter so much for cost?
Costs build over time. A longer term costs more if you use all of it, which is why some borrowers are tempted to take the shortest term possible. But if the exit slips past a short term, you’ll need an extension, and extensions usually come with their own fees and a fresh assessment. Our page on bridging loan terms explains how to set a term that balances cost and safety.
An illustrative example
A business needs a $500k bridge until a sale settles, expected in four months. It has two structures in mind:
- Option A: four-month term, costs paid monthly. Cheaper if everything goes to plan, but no room if settlement slips.
- Option B: seven-month term, costs capitalised, early repayment allowed without penalty. Peak debt is higher by the estimated cost, but the business keeps its cash and has three months of buffer.
If the sale settles on time, Option A costs less. If it slips by six weeks, Option A needs an extension and Option B doesn’t. The business chooses B, because a delayed settlement is its biggest risk. (Illustrative scenario.) See how costs affect your peak and end debt.
What questions should you ask about costs before you sign?
A short list that saves surprises later:
- What is the total estimated cost in dollars if the loan runs the full term?
- Which fees are payable even if the loan doesn’t settle, such as valuation or legal costs?
- Are costs paid monthly, prepaid or added to the loan, and can that be changed?
- Is early repayment allowed, and is any unused prepaid amount returned?
- What does an extension cost if the exit runs late?
- Are there any default charges, and what triggers them?
Ask for the answers in writing. A lender that is comfortable with your exit will be comfortable answering these clearly, and you’ll be able to line up two offers side by side on the numbers that matter.
Ask for the cost of your bridge in dollars
Rates on a website don’t tell you what your bridge will cost. Your security, your exit and your term do. Tell us about them in a 60-second enquiry. There’s no credit check when you first enquire, your details stay with one team rather than being handed out to lenders, and a real person calls you to walk through the numbers.
Please be precise about the amount, the timing and the security. It’s the only way to get a cost estimate you can rely on.
Frequently asked questions
How much does a business bridging loan cost?
It depends on the security, the exit, the term, the amount and the borrower. Every facility is priced on its own circumstances, so the most useful figure is an estimate of the total dollar cost over the term you realistically need.
What fees come with a bridging loan?
Common items include an establishment or application fee, a valuation fee, the lender's legal costs, registration and search costs, and a discharge fee at the end. Ask for all of them in writing, in dollars.
What does 'capitalised' mean on a bridging loan?
It means costs are added to the loan balance instead of being paid as you go. You don't make monthly payments, but the balance grows, so peak debt is higher and the exit repays more.
Is it better to prepay or capitalise costs?
It depends on cash flow. Paying monthly keeps peak debt lower but uses cash during the bridge. Capitalising preserves cash but increases what the exit needs to cover. Prepaying fixes the cost up front but reduces the funds you receive.
Can I repay a bridging loan early?
Often, yes, but terms differ. Ask whether early repayment is allowed, whether any minimum term or early repayment cost applies, and how prepaid costs are treated if you exit early.