Closed Bridging Finance Loans

Closed Bridging Finance

Closed bridging finance is a popular type of loan. It is used to buy a new home when you have sold your current home but have not yet received the proceeds. Once both transactions are completed the total amount of the loan will be repaid in full. There are two main types of bridging loan: a 'closed' bridge and an 'open' bridge. A closed bridge is usually only available to those who have already exchanged contracts on the sale of their existing property. Very few sales fall through after exchange so lenders are happy to offer closed-bridge financing. An open bridging loan allows for a loan to be placed on a new property even when the sale of an existing property is not pending. This type of short term credit advance is used in situations where the sale of a property is delayed and there is a need for cash to complete the purchase transaction of another property. There are two types of advances - open and closed bridging.

Example:

Your property has sold and exchanged contracts but completion will not be taking place until a certain date in the future, however your dream property has also just been put up for sale but has had lots of interest and you may not have completed on the sale of your property in time for the purchase of the desired property. A closed bridging loan can release the equity in your house for a period of time allowing you to purchase the desired property before completing on the sale of your current property.