Retained Interest

How retained interest works

The structure changes the relationship between the gross facility, net cash available and the amount due at exit. The agreement determines calculation, unused-interest treatment and what happens if the facility runs longer than expected.

Practical UK business example

A property borrower sees a £200,000 gross facility but receives less because interest and fees are retained. It plans the transaction using the actual net advance.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It can reduce the need for separate monthly interest payments during a short-term project, but reduces immediately available funding.

Limitations and common misconceptions

It is not free interest or necessarily the same as rolled-up interest added over time. An extension may require additional interest, and early repayment does not guarantee an automatic full refund.

Explore property finance to discuss how the structure relates to your business.