Formulas
Rolled — Monthly Compound
Exit Balance = Advances × (1 + r)^n
Retained — Simple Interest
Retained Reserve = Loan Amount × r × n
Retained interest is a flat reserve, not compound. Gross facility for retained structures is advances plus fees — the retained reserve reduces the net advance but is not added to gross facility.
Frequently Asked Questions
How does rolled interest compound?
Rolled interest compounds monthly: each month, interest is calculated on the outstanding balance (advances + previously rolled interest). The exit balance is advances × (1 + monthly_rate)^term. This produces higher total interest than simple calculation.
Is retained interest cheaper than rolled?
Retained interest uses simple calculation (Loan Amount × rate × term) while rolled uses monthly compound on the outstanding balance. Over a 12-month term at 0.85%, retained total interest is 10.2% of the loan amount vs approximately 10.7% for rolled (compound). The difference grows with term length.
What is the exit balance for a rolled bridge?
For rolled interest, the exit balance is the total repayment amount at term: advances × (1 + monthly_rate)^term. The borrower repays this plus any fees due on exit.
What are typical bridge interest rates?
Standard bridging rates range from approximately 0.5% to 1.5% per month depending on LTV, asset type, borrower profile, and lender. 0.75–0.85% per month is a common benchmark for a standard first-charge residential bridge.