Retained interest bridging loans add all monthly interest to the loan upfront

Retained interest bridging loans add all monthly interest to the loan upfront, meaning borrowers make zero monthly payments during the term—ideal for development projects with no cashflow until sale.

One of the most powerful features of bridging and development finance is the ability to 'retain' the interest. When a property is being heavily refurbished or developed, it is unlettable and generates zero rental income. Servicing a high-interest monthly loan payment out of personal cash reserves would rapidly bankrupt most developers.

To solve this, lenders calculate the total interest for the duration of the term (e.g., 12 months) and deduct it from the gross loan amount on day one. For example, on a £100,000 gross loan with 1% monthly interest (£12,000 total), the lender advances £88,000 to the borrower. The borrower makes no monthly payments. The £12,000 interest sits with the lender and is technically 'paid' over the term. At the end of the term, when the property is sold or refinanced, the borrower repays the full £100,000 gross facility.