Bridging Loan Fees & Costs Australia: Every Cost You Need To Know
Updated: Aug 5
How Much Does A Bridging Loan Cost?
If you're considering buying a property before selling your current one, understanding the true cost of a bridging loan is just as important as understanding the interest rate.
Many borrowers focus solely on the advertised interest rate, but the total cost of bridging finance can include several different fees, charges and expenses depending on the lender, property type and loan structure.
Understanding these costs upfront can help you compare lenders more effectively, avoid unexpected expenses and make informed financial decisions.
Whether you're upgrading your family home, downsizing, purchasing an investment property or buying commercial real estate, this guide explains the most common bridging loan fees in Australia.
What Costs Are Involved In A Bridging Loan?
The total cost of bridging finance may include:
Interest charges
Establishment fees
Application fees
Property valuation fees
Legal fees
Settlement fees
Government charges
Mortgage registration fees
Lender administration fees
Ongoing account fees
Discharge fees
Break costs (where applicable)
Every lender structures their fees differently, making it important to compare the total cost of borrowing rather than focusing on one individual fee.
Interest Charges
Interest is generally the largest cost associated with a bridging loan.
Depending on the lender and loan structure, interest may be:
Paid monthly
Added to the loan balance (capitalised interest)
Structured differently for residential and commercial lending
Because bridging finance is designed as temporary finance, the total interest paid depends on:
Loan amount
Interest rate
Length of the bridging period
Repayment structure
Capitalised Interest
Many Australian bridging loans use capitalised interest.
Instead of making full monthly repayments while you own two properties, the interest is added to your outstanding loan balance.
This can improve cash flow during the bridging period and reduce immediate financial pressure.
However, because interest continues accumulating, borrowers should understand the overall borrowing cost before proceeding.
Establishment Fees
Some lenders charge an establishment or application fee when the loan is approved.
This fee covers part of the administration involved in assessing and setting up the facility.
Whether an establishment fee applies depends on the lender and the loan product.
Property Valuation Fees
Most lenders require one or more independent property valuations.
Valuations help determine:
Current market value
Available equity
Loan-to-value ratio (LVR)
Lending risk
Where both the existing property and the new property require valuation, multiple valuation fees may apply.
Legal Fees
Legal documentation forms part of most bridging finance transactions.
Legal costs may include:
Mortgage documentation
Settlement preparation
Security registration
Conveyancing
Independent legal advice (where required)
Legal fees vary depending on the complexity of the transaction.
Government Charges
Depending on your property purchase, government charges may include:
Stamp duty
Mortgage registration
Transfer registration
Land title fees
These are separate from lender fees and vary between Australian states and territories.
Settlement Fees
Settlement-related costs may include:
Settlement attendance
Electronic settlement fees
Banking fees
Mortgage discharge costs
Settlement adjustments
Although individually small, these expenses should still be included when estimating total borrowing costs.
Ongoing Loan Fees
Some bridging finance products include ongoing administration or account-keeping fees.
Not every lender charges these fees, which is why comparing loan products is important.
Discharge Fees
When your bridging loan is repaid or refinanced, some lenders charge discharge or closure fees.
These costs are usually associated with removing the lender's mortgage over the property.
Can Bridging Loan Fees Be Financed?
Depending on the lender and your financial circumstances, some costs may be incorporated into the overall loan amount rather than paid upfront.
This depends on:
Available equity
Loan structure
Lender policy
Borrowing capacity
Borrowers should understand how financing fees affects the total loan balance and interest payable.
How To Reduce Bridging Loan Costs
Although some expenses are unavoidable, borrowers may reduce overall borrowing costs by:
Building More Equity
Higher equity often improves lending options.
Improving Credit History
A strong credit profile may improve lender choice.
Comparing Multiple Lenders
Different lenders charge different fees.
Having A Strong Exit Strategy
Reducing the bridging period may reduce total interest costs.
Using An Experienced Mortgage Broker
A broker can compare products from multiple lenders and identify finance solutions that align with your circumstances.
What Should You Compare?
When comparing bridging finance, consider:
Interest rate
Total interest payable
Establishment fees
Valuation costs
Legal fees
Ongoing charges
Government fees
Settlement costs
Loan flexibility
Repayment options
Maximum loan term
Lender policies
The cheapest advertised interest rate does not always result in the lowest overall borrowing cost.
Frequently Asked Questions
What fees are involved in a bridging loan?
Common costs include interest, establishment fees, valuation fees, legal costs, government charges, settlement fees and discharge fees.
Are bridging loans expensive?
The total cost depends on the interest rate, loan amount, loan term, lender fees and the overall structure of the finance.
Can I add fees to my loan?
Some lenders may allow certain costs to be incorporated into the loan amount, subject to their lending criteria.
What is capitalised interest?
Capitalised interest means interest is added to the loan balance during the bridging period rather than being paid monthly.
Should I compare more than one lender?
Yes. Because lenders charge different fees and have different lending policies, comparing multiple options can help identify a more suitable finance solution.
Speak With A Bridging Finance Specialist
Understanding bridging loan fees is about more than comparing interest rates.
At Bridging Loans Australia, we help homeowners, investors and businesses compare bridging finance solutions from a wide range of Australian lenders.
We can explain the total cost of borrowing, compare loan structures and help you find a finance solution that aligns with your property goals.
