Bridge financing cost
Model interest, origination points, extensions and other loan costs.
Your scenario
Full-balance simple interest, with no principal paydown. Extension months must be included in the total months. This is a cash-cost estimate, not APR.
How the model works
Cost = principal × rate × months ÷ 12 + origination fee + extension fee + other entered costs.
Worked illustration
At $1.5 million, 10% annual interest and 18 months, interest is $225,000. Add $30,000 origination, $15,000 extension and $15,000 other costs for $285,000 total.
Use the actual funded-balance convention
This calculation charges simple interest on the fully funded principal for every modeled month. It suits an initial comparison when the whole principal is outstanding. A rehabilitation facility that advances money over time can have a different interest path. An undrawn commitment may also carry fees. Compare the note, draw agreement and quote before applying this total to a real transaction.
Include an extension fee only when that is the scenario being tested. The months input includes the entire assumed period, including an extension; adding extension months twice overstates interest. Conversely, a fee does not establish that an extension is available. Actual extension rights may depend on notices, payment, occupancy, debt coverage, hedging or other conditions.
Compare execution and maturity as well as cost
The output is a dollar cost over the entered period, rather than an APR or investment return. Two loans can have similar total cost but very different cash timing, required reserves, guarantees or payoff charges. Ask which fees are paid at closing, withheld from proceeds, financed, or paid later. Financed fees change the balance and require a separate schedule.
Increase the holding period to model delayed stabilization. Then examine the takeout using supportable income, value and remaining capital. Lower monthly payments do not solve a maturity problem. A bridge is most useful when its funded business plan and exit remain credible under delay and a weaker permanent-debt market; the calculator cannot establish that credibility.
What to check before relying on the result
Fully funded interest-only model. Actual draw balances, minimum interest, default rates and exit fees require separate inputs.
Model an adverse scenario as well as the expected outcome. Change one assumption at a time to identify what drives the result, then test combinations that could occur together. A property can meet a modeled financial threshold and still fail diligence, legal requirements or lender approval.
Keep the cash-flow definitions consistent
Distinguish recurring property operations from tenant improvements, leasing commissions, capital expenditure, financing costs and entity-level distributions. Verify whether reserves are expenses, funding requirements or cash movements in the documents you are analyzing. A cash-flow convention must remain consistent across the model and the comparison.
Research context
Consult the source material for this topic. The model is an original educational calculation, not a reproduction of a lender’s underwriting system. The initial numbers are hypothetical inputs rather than current market terms. No scenario inputs are transmitted or saved by this calculator.