Gross Loan vs Net Loan
The gross loan is the figure lenders like to quote — but the net advance is the money you actually receive. This guide explains the difference and shows you how to work it out.
The Two Definitions
Gross Loan
The total facility the lender writes against the property. It includes the money advanced to you plus any interest and fees that are rolled into or retained from the loan. Loan-to-value is normally measured against this figure.
Net Loan (Net Advance)
The cash that actually reaches your solicitor on completion after retained interest and deducted fees are taken out of the gross loan. This is the sum you can put to work on your purchase or project.
Why Quoted Gross Figures Can Mislead
A headline such as "up to £500,000 available" is a gross figure. It tells you the size of the facility, not the cash you will receive. If a chunk of that £500,000 is set aside for retained interest and an arrangement fee, the net advance could be considerably lower.
This is the single most common source of confusion when people first look at bridging. Working backwards from a gross number to a net advance — and doing so consistently across every offer — is essential. Our guide to bridging loan fees sets out the deductions that drive the gap.
Worked Example: From Gross to Net
A lender offers a gross loan of £400,000 over 12 months at 0.80% per month with retained interest and a 2% arrangement fee added to the loan:
- —Gross loan: £400,000
- —Arrangement fee (2% of gross): £8,000 — deducted
- —Retained interest (0.80% × 12 months × £400,000): £38,400 — deducted
- —Telegraphic transfer fee: £40 — deducted
Total deductions: £46,440. Net day-one advance: £400,000 − £46,440 = £353,560. So while the facility is £400,000, the cash you can actually deploy is roughly £354,000. Valuation and legal costs paid separately would sit on top of this as further outlay.
If you need a specific net advance, the calculation runs the other way: you gross up so that after deductions the net lands where you need it. Our bridging loan calculator helps you experiment with both directions.
Day-One Advance vs Total Facility
On some transactions — refurbishment or light development in particular — the loan is split into a day-one advance and further tranches released later against progress or an uplift in value. The total facility is the ceiling; the day-one advance is what completes at the start.
When you compare offers, be clear which number you are looking at. A larger total facility is of little help if the day-one advance falls short of what your purchase needs. If your project involves staged funding, our guide to development finance and the development finance page are worth a look.
LTV Is Measured on the Gross Loan
Loan-to-value is generally calculated on the gross loan, not the net advance. If a lender offers 75% gross LTV on a £600,000 property, the maximum gross loan is £450,000 — before any deductions reduce the net you receive.
This is why two lenders quoting the same LTV can still deliver different net advances: their fee and interest structures differ. Comparing LTV alone is not enough.
How to Compare Like-for-Like
To compare offers fairly, restate each one to the same net advance, then add up every cost to reach the total cost of credit over your expected term. Interest structure matters here too — see retained, serviced and rolled-up interest for how each affects the net figure.
The disciplined method is set out in full in our guide to comparing bridging loan offers.
Reviewed by the 3 Trees Finance team. We help clients translate gross quotes into the net advance that actually matters for their transaction.
Information on this website is provided for general information only and does not constitute financial or legal advice.
Quick Reference
- —Gross = total facility
- —Net = cash you receive
- —LTV is set on the gross loan
- —Deductions reduce the net
- —Compare on net advance
Know Exactly What You Will Receive
Tell us the net advance your transaction needs and we can help you understand what gross facility that implies once fees and interest are accounted for — working with specialist property finance professionals across the UK.
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Work Out Your Net Advance
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