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Bridge Loan Cost Calculator

Enter the principal, rate, term and fee to estimate your bridge loan cost.

How it is calculated

The cost has two parts. Interest is simple, not compounded: interest = principal × annual rate ÷ 100 × months ÷ 12. The origination fee is charged once on the loan amount: origination = principal × fee ÷ 100. The total cost is interest + origination.

Principal is in dollars, the annual rate and the fee are in percent, and the term is in months. Principal, rate and term must be above zero, and the fee must be entered (zero is accepted); leaving any field empty, or a rate of 0, gives no result. Because interest is not compounded and no payments are modelled, the figure suits a loan where everything is repaid at the end, as in a typical bridge loan. Appraisal, legal and closing costs are not included, and the total is not an APR.

Worked example

Suppose you borrow $300,000 for 6 months at 9% a year with a 2% origination fee. Interest is 300,000 × 9 ÷ 100 × 6 ÷ 12 = $13,500.00. The origination fee is 300,000 × 2 ÷ 100 = $6,000.00. The total cost of the loan is 13,500 + 6,000 = $19,500.00, which is 6.5% of the amount borrowed for just half a year. Over those six months the fee alone is almost a third of the total.

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Common mistakes

  • Entering the term in years. The field is in months, so a 6-month loan is 6, not 0.5.
  • Leaving the fee blank when there is none. The field must contain a number, so enter 0.
  • Comparing only the interest rate with a mortgage. The upfront fee matters a lot on a short loan, and the total line includes it.
  • Reading the total as an APR. The 6.5% above is the cost for the whole term, not a yearly rate.
  • Forgetting that extra months cost more. If the old property takes longer to sell, the interest in the result grows with each added month.

Sources

About this calculator

A bridge loan is a short-term (typically 6–12 month) loan that lets a borrower — often a homebuyer purchasing a new property before their current one sells, or a business covering a financing gap — access capital quickly. Because the lender is taking on short-duration risk, bridge loans carry meaningfully higher interest rates than conventional mortgages, plus an upfront origination fee (commonly 1–3 points, i.e. 1–3% of the loan amount).

Total cost is straightforward: interest accrued over the term (principal × rate × term/12) plus the origination fee. Borrowers compare this all-in cost against the alternative — a contingent-sale offer, a home-equity line, or simply waiting to sell first — since a bridge loan's convenience of speed and flexibility comes at a real premium.

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Comments (1)

  • Editorial team

    The origination fee is paid once, while interest grows with every month, so the length of the term decides how heavy the fee looks. On 300,000 at 9 percent with a 2 percent fee, the total is 19,500.00 for 6 months, 26,250.00 for 9 and 33,000.00 for 12, with the fee fixed at 6,000.00. If your sale could slip, run the longer term too. What term did your lender quote you?

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