Before the offer
- Valuation fee: paid to the lender's panel surveyor once you proceed. It is non-refundable once the valuer has inspected, and the report is usually addressed to that lender only. Larger or commercial properties cost more to value.
- Application or commitment fee: some lenders charge a small fee to start underwriting. Ask whether it is refundable or deducted from the arrangement fee.
- Monitoring surveyor's initial report: on works and development cases, the lender's surveyor may charge for reviewing costs and the programme. See what a monitoring surveyor does.
These are the fees most likely to come from your own cash before completion, so budget for them.
At completion
- Arrangement fee: commonly 1% to 2% of the gross loan, also called a facility or completion fee. Usually added to the loan, which reduces the net advance where the lender is at its maximum loan to value.
- Lender's legal fees: paid by you, often deducted from the advance or paid via your solicitor.
- Your own legal fees: for the loan and, on a purchase, conveyancing, searches and registration.
- Retained interest: not a fee, but deducted at completion where interest is retained.
- Telegraphic transfer and administration charges: small, but they appear on completion statements.
Broker fees and commission
We may charge you a fee for our services and, in addition, the lender we introduce you to will typically pay us a commission, either as a fixed fee or as a percentage of the amount you borrow.
Where a client fee, broker fee, appraisal fee or commitment fee applies, this will be disclosed separately before you proceed. If you would like further information about any commission paid to us by a lender, including the amount, please ask us in writing.
During and at the end of the loan
- Drawdown fees: some works facilities charge a fee per release of funds, plus the monitoring surveyor's visit.
- Exit fee: charged by some lenders on repayment, often a percentage of the loan or a number of months' interest. Many bridging lenders charge none.
- Redemption administration fee: a small fee for preparing the redemption statement and releasing the charge.
- Extension fee: if you extend the term, typically a percentage of the balance, and possibly a new valuation. See extending a bridging loan.
- Default interest and charges: applied if the loan is not repaid by its end date.
Budgeting your cash
Split your budget into fees paid from your own funds before completion (valuation, any application fee, some legal costs), fees added to or deducted from the loan (arrangement fee, retained interest, lender's legal fees) and fees paid on exit (any exit and redemption fees, plus interest if rolled up).
Our worked example in how much a bridging loan costs shows these together. Instant Quotes shows each lender's arrangement and exit fees beside the rate.
Common questions
Do I pay the valuation fee if the loan does not complete?
Usually yes. The valuation fee is paid to the surveyor for the work done and is normally non-refundable once the inspection has taken place.
Can the arrangement fee be added to the loan?
Usually, yes. It counts towards the gross loan, so it reduces the net advance where the lender is at its maximum loan to value.
Do I pay the lender's legal fees?
Yes. In bridging the borrower normally pays both their own and the lender's legal fees.
What if the lender changes the terms after valuation or credit approval?
You do not have to accept revised terms, but fees already paid, such as the valuation, are not usually refundable. Ask for the reasons in writing and compare the new terms against other lenders.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
