There are two options available when choosing a bridging loan – Open and Closed.
With an open bridge loan, there is no fixed repayment date, but most lenders insist that you settle your debt within a year. This type of finance is suitable for urgent transactions, such as buying a property at auction, and it offers greater flexibility to those who need cash fast but, you should have a clear repayment strategy and a back-up plan in case things go wrong.
With a closed bridge-loan, you have a fixed end date when you must pay back what you borrowed. These loans are short-term, lasting just a few weeks or months, and reserved for those who have already exchanged contracts and are waiting for a property sale to complete. With a closed bridging loan, you need to know precisely when you will receive the funds to pay back what you owe and be able to provide the lender with a clear ‘exit plan’.