Closed bridging
With a closed bridge, the event that repays the loan is already contractually fixed. The common example is a homeowner who has exchanged contracts on their sale, with completion booked, but needs to complete on the purchase first. Lenders usually ask for a copy of the exchanged contract or confirmation from the solicitor.
Because the exit is certain, terms are short, often a few weeks to a few months, and lenders may offer better pricing or more flexibility on loan to value.
Open bridging
An open bridge has a planned exit without a fixed date. Examples include buying before your current home is under offer, buying at auction and refinancing once the property is mortgageable, or refurbishing and selling. Most investment bridging is open.
Open bridges still have a maximum term, commonly 12 to 24 months, and the full balance is due by then. Lenders want evidence that the exit is realistic: comparable sales, an agent's opinion of value, a mortgage agreement in principle or a clear plan of works.
How the choice affects cost and term
- Closed bridges carry less risk, so pricing can be sharper and decisions quicker
- Open bridges are priced on the strength of the exit evidence and the loan to value
- Interest on both is usually retained or rolled up; a longer open term means more retained interest and a smaller net advance
- An open bridge chosen with spare time in the term avoids paying for an extension later
See bridging interest rates for how retained and rolled-up interest work.
Chain breaks and regulation
Chain breaks are where the open or closed question comes up most. If the property you are buying will be your home, the bridge is a regulated mortgage contract, whether open or closed, and the lender will assess affordability and the repayment plan. We will tell you at the outset how your case will be handled. See what is a chain break and chain break bridging loans.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Which to choose
You rarely choose between them: the facts decide. If your exit is exchanged, tell the lender and provide the evidence, as it may improve the terms. If it is not, plan an open bridge with a realistic term and evidence for the exit. Compare lenders for either on Instant Quotes, and estimate the cost on our bridging calculator.
Common questions
What is an open bridging loan?
A bridge with a planned exit but no fixed repayment date, repaid within a maximum term, commonly 12 to 24 months.
What is a closed bridging loan?
A bridge with a confirmed repayment date, usually because the sale that repays it has exchanged.
Are closed bridging loans cheaper?
Often, because the exit is certain. Pricing still depends on loan to value, the property and your circumstances.
Can an open bridge become closed?
In effect, yes. Once your sale exchanges, the exit is fixed, though the loan terms do not change unless the lender agrees.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
