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?

Costs depend on the loan amount, term, rate and fees. For example, a $750,000 bridge over 6 months at 8.5% a year, with interest capitalised monthly, a 1.5% establishment fee and $2,500 of discharge costs, comes to about $46,200 before other costs. Use the calculator above for your own inputs.

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 calculator

Quick answer

A bridging loan in Australia costs three things: an establishment fee charged at drawdown, interest capitalised monthly over the bridge term rather than serviced, and discharge costs at exit. On a $750,000 facility at 8.5% p.a. capitalised over 6 months, with a 1.5% establishment fee and $2,500 of discharge costs, the total is about $46,200 before other costs. The calculator below models any loan amount, rate, and term.

Inputs

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

Estimated bridging cost from these inputs

$46,195

Over a 6-month bridge at 8.50% p.a., interest capitalised, including the establishment fee and discharge costs entered. Other costs are listed below.

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)

Assumptions

Interest compounds monthly and is paid at exit with the loan (capitalised).
The establishment fee is the percentage entered, charged on the loan amount.
The rate stays the same for the whole term.

Illustrative estimate only, based on the inputs and assumptions shown. This is not a quote, credit approval or commitment to lend. Actual interest, fees, repayments and terms may differ. Costs not included are listed below.

Costs not included

Valuation fees
The borrower's own legal costs, and lender legal costs beyond the discharge costs entered
Other lender fees
Government charges and registration fees
Default interest, default fees and enforcement costs

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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.

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 about $32,400, nearly three times a 1.5% 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 costs it does not include: valuation fees, the borrower's own legal costs, the lender's legal costs and government charges. They depend on the transaction and are not estimated here.

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