Closed Bridging Finance
This type of Bridging loan is associated with the purchase of a property. The timing of the repayment of the Bridging loan is very well defined as some specific date in the future.
An example would be where a person has exchanged contracts on the sale of a property but completion will not take place for 3 months. The person is certain that proceeds from the sale of the property will occur with some certainty but wants to buy and complete on the purchase of another property before the completion date of the house they are selling.
A closed bridging loan would allow the purchase of the new property and will finance it for 3 months until the proceeds from the house they are selling come through to repay the closed bridging loan.
Closed Bridging Finance represents less risk for a lender because the certainty and timing of the repayment of the loan are clear and backed up by the legal exchange of contracts on the first property.
Open Bridging Finance
Open Bridging finance is not so well defined in its repayment timings and method. It can also be used for many more purposes than a closed bridging loan.
The majority of bridging loans that we arrange are open bridging loans and allow for these loans to be used for
any purpose.