Bridging Finance

Open bridging loans are for those who don’t have precise dates to make the repayments on money borrowed, for example; you don’t have a buyer in place / sale completion date. Lenders usually regard open bridging loans as risky and therefore have higher interest rates than closed bridging finance, the lender will also need to be satisfied that you can make the repayment of your borrowings. Bridging loans are typically six to twelve months depending on the terms set out in the application process, if you miss your repayments you will be charged late fees.

Closed bridging loans are where the lender knows exactly how you are going to pay back the amount you have borrowed and specific repayment dates, also know as an exit strategy. If you know that you will be able to pay back the loan from the sale of the property and have a completion date, a closed bridging loan is perfect for you. If you do not have specific dates for the completion of the property sale, but you do have other means of making the repayment and can show the lender how you will make the repayment, they are likely to provide you with the funds. If you choose to apply for a closed bridging loan, the interest rates are usually lower because the lender knows you are at lower risk of failing to pay back the amount you borrowed.