Bridge Loan Costs Explained: Points, Interest, Fees and Carrying Costs

Axelrad Capital doesn't publish a bridge interest rate or point schedule on its Bridge Loans page. Pricing is set per deal. This guide explains each cost category so you can compare any quote line by line.

What are points on a bridge loan?

A point is 1% of the loan amount, usually paid at closing. On a $300,000 loan, one point is $3,000. Points are often deducted from the loan proceeds or added to your cash to close. Ask whether points are charged on the full loan, including rehab money that's held back, or only on what's funded at closing.

How is bridge loan interest charged?

Most bridge loans charge interest monthly on the outstanding balance, and many are interest-only. Two questions matter:

• Is interest charged on the full loan, or only on funds drawn? On a renovation loan with a holdback, paying interest only on drawn funds can lower your cost noticeably. Ask which applies to your deal and get the answer on the term sheet.
• How is it calculated? Monthly interest on an interest-only loan is roughly balance × annual rate ÷ 12. Some lenders use a daily calculation instead.

Here's a quick way to compare quotes. Each 1 percentage point of annual rate on $100,000 of balance is about $83 a month ($100,000 × 1% ÷ 12). Scale it to your balance.

What lender fees should you expect?

Names vary, but bridge quotes commonly include some of:

• Underwriting or processing fees.
• Document preparation fees.
• Draw or inspection fees on renovation loans.
• Extension fees, if you need more time.
• Wire, servicing or payoff-statement fees.

What Axelrad publishes: its homepage FAQ says "No draw fees," and its Bridge Loans page and FAQ say there are no prepayment penalties on bridge loans. For every other fee, rely on your term sheet.

What third-party costs come with a bridge closing?

These go to other parties, not the lender:

• Title search, title insurance and settlement or closing fees.
• Recording fees and any transfer taxes, depending on the state and county.
• Valuation (appraisal or alternative). Axelrad lists "no appraisal options" on some bridge deals.
• Insurance for the property type and condition.
• Entity or legal document costs, if applicable.

What carrying costs should be in the budget?

Carrying costs run every month you hold the property: interest, property taxes, insurance, utilities, HOA dues, lawn care and security on vacant property. They're the costs most often missing from first-time bridge budgets, and they grow when the timeline slips.

Bridge loan total cost worksheet

Points equal the loan amount times the points percentage, interest equals balance times annual rate divided by 12 times months held, and total cost is the sum of every cost line. Financing cost as a percent of the loan is points, interest, lender fees, draw fees and extension fees divided by the loan amount.

Run the worksheet twice: once at your planned hold, and once with three to six extra months.

Example: comparing two quotes (hypothetical)

Example for illustration only. The rates and points below are made-up figures for the arithmetic, not Axelrad pricing or market data.

Two quotes on a $300,000 loan held 9 months:

• Quote 1: lower rate, more points, interest on the full loan from day one.
• Quote 2: slightly higher rate, fewer points, interest only on drawn funds, with $80,000 of rehab held back.

On Quote 2, the average balance during the renovation months is lower, so the interest line can come in under Quote 1 even at a higher rate. Points on Quote 1 are a fixed cost, paid whether you exit in month four or month nine. The cheaper quote depends on how fast the rehab money is drawn and how long you hold. Put both in the worksheet instead of comparing rates.

How do you lower bridge loan costs?

• Shorten the hold with a ready contractor and an exit started early.
• Ask whether interest is charged only on funds drawn.
• Ask for every fee in writing on the term sheet, and compare totals rather than rates.
• Use a lender with no prepayment penalty, so you stop paying interest when you exit early.
• Keep draws moving with clean documentation, so work doesn't stall.

Key takeaways

• Bridge costs = points + interest + lender fees + third-party costs + carrying costs.
• Axelrad doesn't publish bridge rates or points. Use your term sheet.
• Axelrad publishes no draw fees and no prepayment penalties on bridge loans.
• Compare quotes on total dollars over a realistic hold, not on rate alone.
• Always run a delayed-exit scenario.

Get a real number

The worksheet only works with a real quote. Submit your deal for terms, or review the Bridge Loans page.