Guide · costs
Refurbishment Loan Costs, Line by Line
The rate is the headline, not the bill. Here is every line that appears on a refurbishment bridge, what it typically costs, and which lines are negotiable.
Interest: retained, rolled or serviced
Refurbishment bridges quote monthly rates, currently 0.75 - 0.99% per month for light works and 0.85 - 1.15% for heavy. How the interest is paid matters as much as the rate.
- Retained:the full term's interest is deducted from the advance at completion. No monthly payments; you are borrowing the interest. Standard for refurbishment projects because the property produces no income during works.
- Rolled: interest compounds onto the balance and is repaid at exit. Similar cashflow effect, slightly different arithmetic, common on heavy facilities.
- Serviced: you pay monthly. Cheapest in total cost but requires income to service, and most refurb borrowers rightly prefer their cash in the works.
One subtlety worth money: on staged heavy facilities, interest should accrue only on drawn funds. A lender charging on the full committed facility from day one is materially more expensive at the same headline rate.
The fee schedule
| Line | Typical cost | Notes |
|---|---|---|
| Arrangement fee | 1.5 - 2% of facility | Usually added to the loan |
| Exit fee | 0 - 1% | Avoidable on most light deals; we screen for it |
| Valuation | £300 - £2,500+ | Heavy deals pay twice: current value and GDV |
| Monitoring / QS | £250 - £750 per visit | Heavy only; budget one visit per drawdown |
| Lender legals | £750 - £2,000+ | You pay both sides' solicitors |
| Broker fee | deal-dependent | Quoted up front, no surprises at offer |
| Telegraphic transfer / admin | £25 - £50 | Small, but it will be there |
The costs people forget
- Minimum interest periods: one to three months of interest is usually payable even if you exit in week two. Relevant when a quick sale is plausible.
- Extension fees: typically 1% plus a rate step if the loan outlives its term. The cheap fix is a longer term at day one; retained interest on unused months is often refunded.
- Works contingency: not a lender fee, but the most common cause of distress is a schedule of works with no 10 - 15% buffer. Lenders notice its absence too.
- Two sets of exit costs: a BRR exit pays remortgage valuation and legals; a sale exit pays agency and conveyancing. Neither appears on the bridge quote.
Comparing quotes properly
The only honest comparison is total cost of funds over your realistic term: interest mechanics plus every fee line, on your actual drawdown profile. A 0.79% loan with a 2% arrangement fee, an exit fee and interest on committed funds regularly costs more than a 0.89% loan with clean mechanics. This arithmetic is what we do for every deal we place; you can approximate it yourself with the refurbishment loan calculator.
Talk to us about your project
Tell us the property, the schedule of works and the exit. We will come back with indicative terms, usually the same working day.