Flexible Interest Options for Bridging Loans

Monthly serviced: you pay interest each month (lower total cost), improving lender confidence. Rolled-up: interest accumulates and is paid when you exit (higher total due to compounding), but improves your monthly cashflow. For a £200k loan over 6 months at 0.50%: monthly = £6,000 total cost with £1,000 payments; rolled-up = £6,150 total cost but no monthly payments. The key trade-off is monthly cashflow vs. total cost.

Yes, rolled-up is ideal for developments. You avoid monthly £1,000+ payments, keeping that capital for construction, materials, labour, and contingencies. The slightly higher total interest cost (compounding) is often worth the improved project cashflow. However, ensure your exit strategy will cover the accrued interest - if your development sale is £50k lower than expected, you may not have enough to cover the loan and interest.

Retained interest is better if you want absolute certainty on costs and have a very short loan term. For example, a 3-month auction bridge where you know exact exit and want no surprises. However, you receive less upfront capital (£193,850 instead of £200k), which hurts for larger projects. Rolled-up is more flexible - same upfront capital, similar total cost, but you keep more proceeds if you exit early. For most situations, rolled-up is superior to retained.

Monthly serviced: you stop paying interest when you repay, so early exit saves money. Rolled-up: interest has already compounded for the full term, so early exit may not save money (depends on lender terms). Retained: early exit saves nothing - you've already paid interest for the full term upfront. Always ask your lender about early repayment terms - some offer interest refunds or rebates for early exit.

Lenders generally prefer monthly serviced (reduces their risk) but they'll offer all three options. Your choice affects the interest rate offered - rolled-up typically costs 0.05-0.10% more monthly than monthly serviced, reflecting higher risk. For example: monthly serviced at 0.50%, rolled-up at 0.55-0.60%. Ask your broker (or FastBridge Funding) to get quotes for all three options so you can compare true total costs.

Monthly serviced: you continue paying monthly interest, fairly straightforward. Rolled-up: you may owe accrued interest for the extended period, increasing your total cost. Retained: depends on lender - you may pay additional interest for the extension. Always confirm your lender's extension policy upfront. For uncertain timelines, monthly serviced is safest as you don't face surprise compounding interest.

Generally no - interest type is set at the beginning and locked in. You cannot switch from monthly to rolled-up halfway through. However, when you refinance or extend the loan, you might negotiate different terms. Always think through your cashflow for the full expected loan term before committing to an interest type.

Monthly: (monthly rate % × loan amount × number of months). Rolled-up: use compound interest formula or ask your lender for an illustration. Retained: (monthly rate % × loan amount × number of months) deducted upfront. Get exact figures from lenders before deciding. FastBridge Funding can calculate this for you and show comparisons across 100+ lenders - we ensure you're comparing true total costs.