Retained, Serviced and Rolled-Up Interest
Bridging interest can be charged in three main ways. Each affects your cash flow and net advance differently. We compare all three on the same base loan so you can see how they stack up.
Our Base Loan
To make the comparison fair, we use the same figures throughout: a gross loan of £250,000, a rate of 0.85% per month and a 12-month term. At that rate, a full year of interest is roughly £25,500 (0.85% × 12 × £250,000). What differs is when and how that interest is paid.
Because interest interacts with fees and the net advance, it helps to read this alongside gross loan vs net loan and bridging loan fees.
1. Retained Interest
The lender calculates the interest for the full term up front and holds it back from the loan. You make no monthly payments; the interest is already accounted for.
Retained interest: £25,500 deducted from the gross loan on day one. Ignoring other fees, the net advance is £250,000 − £25,500 = £224,500. You pay nothing monthly, and if you redeem early many lenders refund interest for the unused period — though this is not universal, so confirm it.
2. Serviced Interest
You pay the interest each month, much like a conventional mortgage. Nothing is retained for interest, so the day-one net advance is higher — but you need the income or cash flow to meet the monthly payments, and the lender will want evidence you can.
Monthly payment: £2,125 (0.85% × £250,000). Over 12 months that is £25,500 in total, but nothing is held back, so the net advance is the full £250,000 less any fees. Redeem after, say, six months and you simply stop paying — you will have paid about £12,750 in interest rather than the full year.
3. Rolled-Up Interest
Interest accrues each month and is added to the balance, then repaid in full at redemption alongside the capital. There are no monthly payments and nothing is retained up front, so the day-one net advance is high — but the amount you owe grows over the term.
Some lenders compound the rolled-up interest monthly rather than charging it on a flat basis, so the total can edge slightly above the simple £25,500. The net advance on day one is close to the full £250,000 (less fees), but at month 12 you repay the capital plus all accrued interest in one sum. Redeem at six months and you repay roughly £12,750 of accrued interest — check whether any minimum term applies.
Comparing the Three
| Structure | Monthly cost | Day-one net advance |
|---|---|---|
| Retained | None | Lowest (~£224,500) |
| Serviced | £2,125 | Highest (~£250,000) |
| Rolled-up | None | High (~£250,000) |
Figures exclude arrangement, valuation and legal fees for clarity. Model your own numbers with the bridging loan calculator.
Cash Flow and Net Advance
Retained interest gives certainty and no monthly outgoings but the lowest day-one cash. Serviced interest preserves your day-one advance but demands monthly payments the lender must see you can afford. Rolled-up interest protects cash flow throughout and keeps the day-one advance high, at the cost of a larger balloon repayment at the end.
Early Repayment Effects
Early repayment behaves differently across the three. With serviced and rolled-up interest you generally only pay for the time you have used the money, subject to any minimum term. With retained interest you have already funded the whole term, so any saving depends on the lender refunding the unused portion. Always check the minimum interest period and any early repayment charge — our guide to comparing offers explains why.
Which Suits Which Borrower?
Retained interest tends to suit borrowers who want a fixed, hands-off cost and can accept a lower net advance. Serviced interest suits those with reliable income who want to maximise day-one cash and keep the redemption sum down. Rolled-up interest suits projects — refurbishments or developments where there is no rental income yet — that need to preserve cash until an exit crystallises. Many auction and development purchases lean on rolled-up or retained structures; see auction finance and development finance.
Reviewed by the 3 Trees Finance team. We help borrowers pick the interest structure that fits their cash flow and exit, not just the lowest headline rate.
Information on this website is provided for general information only and does not constitute financial or legal advice.
At a Glance
- —Retained: lowest net, no payments
- —Serviced: highest net, monthly payments
- —Rolled-up: high net, balloon at end
- —Check minimum interest periods
- —Confirm any early-repayment refund
Match the Structure to Your Plan
Tell us how your project generates cash and when you expect to exit, and we can help you weigh retained, serviced and rolled-up structures — working with specialist property finance professionals across the UK and applying our approach to selecting specialists.
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Choose the Right Interest Structure
Share your requirement and we will help you weigh up the cash-flow trade-offs. You can also get in touch here.