The world of commercial finance comes with it’s own terminology. Amongst these are a way of describing bridging loans as either open or closed.

This article will explain the key differences, so that you can make a more informed decision about your bridging finance.

Open Vs. Closed Bridging Finance

What are Closed Bridging Loans?

More commonly used, closed bridging loans are chosen by those with a specific time frame in mind for their finance.

Those who opt for the closed option will be able to specify a fixed exit date at the point of securing the finance. This gives the lender a clear picture of the financial transaction taking place, and hence they are usually able to offer lower rates of interest.

What are Open Bridging Loans?

Open bridging loans are needed if you’re not sure of the exact period you need the finance for.

Where the perfect property or development opportunity arises, but a previous property hasn’t yet sold, an open bridging loan provides the necessary capital to seize the opportunity.

How long it takes to pay the loan back will depend on how long it takes to sell the existing property, so in that instance open bridging finance can last as long as necessary, assuming the finance broker is happy to keep on lending.

Unsurprisingly, open bridging comes with higher levels of interest. They are also harder to find with many lenders only offering closed finance.

Do You Need Assistance Finding a Source of Open Bridging Finance?

Here at Business Expert, we offer specialist help at securing the right finance for you. We have contacts with multiple lenders and our concierge service is there to help you source the right provider for your situation.

Do make contact if you would like to talk with one of our advisers about your requirement.

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