💬 Thinking of using a bridging loan for your first property refurbishment?
You’re not alone. Bridging loans are a popular choice for property investors looking for fast finance to secure and renovate homes. But here’s what many new developers don’t realise: your loan might not cover everything—and those “extras” can add up fast.
In this guide, we’ll break down exactly what bridging loans do and don’t cover, so you can budget with confidence.
💸 Gross vs. Net Loan Amount: Know the Real Budget
Many first-time investors assume they’ll get the full loan amount in cash. But there’s a key difference:
- Gross Loan Amount = The total loan agreed (includes fees and interest)
- Net Loan Amount = The money you actually receive
🔍 Example:
You’re approved for a £100,000 bridging loan.
The lender retains £8,000 for interest and charges a £2,000 fee.
👉 You receive just £90,000 to spend.
Always base your renovation budget on the net, not gross loan.
📉 Valuation Costs: The First Upfront Fee
Lenders won’t give you a loan without knowing what the property is worth today—and what it could be worth after refurbishment.
Typical fees:
- Standard valuation: £300–£1,500
- Red Book valuation (RICS standard): £1,000+
This cost is paid upfront, often before your loan is approved. And if the valuation comes in lower than expected, your loan size may be reduced.
⚖️ Legal Fees: Often Double What You Expect
Unlike traditional mortgages, bridging loans often require you to cover two sets of legal costs:
- Your solicitor
- The lender’s solicitor
Estimated legal costs: £800–£2,000+
If your deal is time-sensitive or complex, costs can rise quickly.
💡 Pro Tip: Always ask for fixed quotes from both legal teams early on.
🕵️♂️ Extra Surveys: The Silent Budget Killers
If the property shows signs of age, damage, or prior neglect, lenders may require additional specialist reports.
Common additional surveys:
| Survey Type | Estimated Cost |
| Structural Survey | £400–£1,200 |
| Environmental Report | £250–£500 |
| Roof/Drainage Survey | £300–£800 |
| Asbestos/Contamination | £200–£600 |
These can delay your application—or increase your overall costs significantly.
📋 Real Example: Emma’s First Flip
Emma, a first-time property investor, bought a 1930s semi in need of serious TLC.
She was approved for a £150,000 gross bridging loan.
But after valuation and legal fees, she received just £137,000 net.
Then came unexpected extras:
- £1,000 Red Book valuation
- £1,500 in legal fees
- £750 for a structural survey
Total surprise costs: £4,250.
Thanks to a helpful broker and a £10K contingency fund, Emma still turned a profit—but just barely.
💼 Other Costs You Might Overlook
| Cost Type | Covered by Loan? | Estimated Cost |
| Broker Fee | Sometimes | ~1% of loan |
| Exit Fee | Sometimes | 1–2% of loan |
| Monitoring Surveyor | No | £250–£750 |
| Insurance (vacant property) | No | £150–£500 |
| Admin or Arrangement Fees | Often deducted | £500–£2,000 |
These costs can eat into your profit margin if not accounted for early on.
🤔 Frequently Asked Questions
Do bridging loans cover refurbishment works?
Usually not. Most bridging loans are secured on the property’s value, not the cost of works. You’ll need separate funds or staged release agreements.
Can I roll all costs into the loan?
Some lenders allow this (especially for fees like interest), but you must clarify this upfront. Legal and valuation fees are typically paid out-of-pocket.
What if I don’t have money for valuation/legal fees?
Look for lenders who offer retained fee options or use brokers who can negotiate fee packaging. But keep in mind, this often reduces your net loan.
How long does the process take with all these extra steps?
On average, bridging loans close in 10–21 days, but surveys, legal back-and-forth, and document delays can extend this—so plan for 3–4 weeks.
✅ How to Avoid Costly Surprises
1. Get a full breakdown from your lender or broker showing:
- Gross loan
- Fees deducted
- Net loan to you
2. Ask for fixed fee quotes for all services:
- Valuation
- Legal
- Surveys
3. Build in a contingency of at least 10–15% of your total renovation budget
4. Use experienced brokers and lenders who are transparent about all costs
💬 Need help finding a clear and honest bridging loan for your project?
👉 Speak to our expert team at Sunrise Commercial — no jargon, no pressure.
📞 Call us at 07939 091418
📧 Email: john@sunrisecommercial.co.uk
🌐 Visit: https://www.sunrisecommercial.co.uk/
📘 Bonus Download: Bridging Loan Cost Checklist
Want a simple printable checklist of every bridging loan cost to watch out for?