If you’ve been thinking about using a short-term finance option, you might have found yourself looking at open and closed bridging loans. Many people don’t know the difference between the two, but it mainly comes down to the repayment terms and exit strategy involved.
What’s a Closed Bridging Loan?
With a closed bridging loan, you have a fixed repayment date that you agree at the start. This means your lender will know exactly when to expect their money back. This can mean getting a lower interest rate and reduced fees. This kind of bridge loan might be the best for you if you have a clear plan in place like selling the property by a specific date or refinancing it with a mortgage.
What’s An Open Bridging Loan?
With an open bridging loan, there’s no set repayment date. This is a more flexible option which appeals to borrowers with uncertain timelines, including those who haven’t come up with a robust exit strategy yet. This means the lender takes on more risk, so you can expect to pay more in interest and fees. If you’re waiting on planning permission, are renovating a property but don’t have a specific completion date or need more time for any reason, you might choose an open bridge loan over a closed one.
Open vs Closed Bridging Loans UK
When you’re choosing between an open vs closed bridging loan UK, you need to think carefully about how convincing your repayment plan is and how much flexibility you need. It’s really important to remember that open and closed bridging loans are right for different kinds of borrowers and projects.
Closed bridging loans can give you more certainty and better rates, but you’ll need a firm exit plan before you borrow. An open bridge loan can give you more breathing space when you’re working on a complex project and don’t know exactly when you’ll be able to repay. However, this valuable flexibility will cost you more. Your specific situation and future plans can help you decide which kind of bridging loan you should apply for, and we can help you come to the right decision.
Why Choose Us For an Open or Closed Bridging Loan?
At Bridge Loan Direct, we specialise in both open and closed bridging loans throughout the UK. Our expert team can give you all the guidance you need when you need advice on making the right choice. We have access to a panel of more than 300 lenders, which makes it simple for us to find the right products and solutions for you. If time is of the essence, we will work hard to get your funding ready at short notice.
