Which One is Right for You?

Bridging loans are a flexible way to access short-term finance, often used in fast-moving property transactions. But not all bridging loans are the same. One key distinction is whether the loan is open or closed—and understanding the difference is essential before deciding which is right for you.

Here’s what you need to know.

What Are Bridging Loans?

Bridging loans are secured, short-term loans that help borrowers complete property transactions when traditional finance isn’t fast enough. They’re commonly used for:

• Buying at auction

• Breaking a property chain

• Financing a purchase before a sale is completed

• Funding renovations prior to refinancing

Because these loans are secured against a property, they do come with risk—if you can’t repay, you may lose the asset. So it’s vital to have a clear exit plan in place

What is an Open Bridging Loan?

An open bridging loan does not have a fixed repayment date. It’s ideal if you need flexibility—perhaps you’re waiting on a sale or refinancing arrangement, but don’t have a firm timeline.

✅ Key benefits:

• Flexibility to repay when funds become available

• Can be suitable if your exit strategy is uncertain

⚠️ Points to consider:

• Although there’s no set repayment date, most lenders expect repayment within 12 months

• Interest rates tend to be higher due to the greater risk for lenders

• You may pay more overall if the loan takes longer to clear

What is a Closed Bridging Loan?

A closed bridging loan comes with a fixed repayment date, usually because the borrower already has a defined exit strategy—such as a contract of sale or confirmed mortgage offer.

✅ Key benefits:

• Lower interest rates compared to open bridging loans

• Preferred by lenders due to reduced risk

• Ideal when timing is more predictable

⚠️ Points to consider:

• You must stick to the agreed repayment timeline

• Less flexibility if delays occur in your exit plan