How is bridging loan interest calculated?

Most bridging loans capitalise interest, the lender adds the accrued interest to the loan balance each month rather than charging a monthly payment. The borrower pays the entire balance (principal + capitalised interest) at exit. This calculator compounds monthly at the input rate to show the final balance.

What does a bridging loan typically cost in Australia?

All-in costs depend on the loan amount, term and rate, but for a $750k bridge over 6 months at 8.5% p.a. the total cost typically sits around $50-55k, establishment fee (1.5%), capitalised interest, and discharge / legals at exit. Use the calculator above to model your specific scenario.

Are these numbers a quote?

No. The calculator is educational, the actual rate, fees, term and structuring on any specific file are decided by the credit team based on the security, sponsor, exit and live portfolio position. Submit a scenario for indicative terms.

Can interest be serviced monthly instead of capitalised?

Yes, on longer-term files where the borrower's cashflow supports it. Servicing is sharper (lower total cost) but requires monthly outgoings. On short-dated bridging where the exit is clear, capitalising is the standard structure.

Calculator

Bridging loan cost

Total cost of an Australian bridging facility, establishment fee, capitalised interest, discharge. Educational only; actual rates are file-specific.

Inputs

Bridging loan amount (AUD)Interest rate (% p.a.)Bridge period (months)Establishment fee (% of loan)Discharge / exit costs (AUD)

Estimated total bridging cost

$46,195

Over a 6-month bridge at 8.50% p.a., interest capitalised, fees inclusive.

Establishment fee

$11,250

Capitalised interest

$32,445

Discharge / exit

$2,500

Approx. monthly cost

$5,407

(linear approximation)

Loan balance at exit

$782,445

(loan + capitalised interest)

Total payout at exit

$784,945

(loan + interest + exit fee)

How bridging loan cost is calculated

The total cost of a bridging loan in Australia breaks into three components: establishment fee charged at drawdown, interest accrued over the bridge period (usually capitalised, not serviced), and discharge costs at exit. Most private bridging files don't charge an exit fee on top , the cost is in the rate.

Interest is the largest component on most bridges. On a $750,000 facility at 8.5% p.a. capitalised over 6 months, the accrued interest is around $32,000, almost double the establishment fee. The longer the bridge, the more the compounding effect grows the balance.

Capitalised interest vs serviced

Bridging interest is usually capitalised, added to the loan balance each month rather than serviced as a monthly payment. The borrower pays everything at exit. This is structurally sensible for bridging because the borrower is typically waiting on the sale of another property to fund the repayment; servicing monthly interest from cashflow during the bridge would defeat the purpose.

On longer-term private credit (12-24 months) where the borrower has the cashflow to service, monthly servicing is sharper, the loan balance stays flat, so the absolute dollar cost of interest is lower. The capitalised vs serviced calculator shows the difference.

What the calculator doesn't model

The calculator above is intentionally simple. Real files also carry: valuation fees (paid by the borrower at application), legals for the borrower's own solicitor, lender's legal costs (recoverable from the borrower at settlement), and stamp duty on the mortgage in some states. Add roughly $4,000-$8,000 to the calculator output for a realistic all-in number on a typical residential bridge.

Submit a scenario Archer Flex (bridging), product Bridging finance, full guide