Closed Bridging Loans often begin with a race against time. A buyer has exchanged contracts at auction, the completion date is fixed, and a traditional mortgage will not complete quickly enough. In situations like this, Closed Bridging Loans provide short-term property finance when the exit route is already agreed, and certainty is paramount.
What are Closed Bridging Loans
Closed Bridging Loans are short-term property loans where the repayment strategy is confirmed from the outset. The exit is usually a mortgage offer, a property sale, or a refinance that has already been approved.
Because the exit is known, lenders generally view closed bridging loans as lower risk than open bridging loans. This can result in more competitive interest rates and clearer lending terms.
For a broader overview of this type of finance, you can also read our guide on Bridging Loan
How Closed Bridging Loans Work
A closed bridging loan is secured against residential, semi-commercial, or commercial property. The loan term is typically one to twelve months.
Interest is commonly rolled up and repaid at the end of the term, along with the loan balance. Some lenders may allow monthly interest payments depending on affordability.
The lender will assess:
- The value of the property
- The loan-to-value required
- The strength and timing of the agreed exit
- The borrower’s experience and overall position
All lending is subject to status and lender criteria.
When Closed Bridging Loans Are Used
Closed Bridging Loans are commonly used in time-sensitive property scenarios, including:
- Property auctions with fixed completion deadlines
- Chain breaks where funds are needed quickly
- Purchases before a mortgage completes
- Short-term refinancing
They are also used for commercial property transactions. In these cases, borrowers may wish to compare options alongside a Commercial Mortgage.
Benefits of Closed Bridging Loans
Closed Bridging Loans offer several practical advantages:
- Fast access to funds
- A clear and agreed repayment route
- Greater certainty for buyers and sellers
- More flexibility than standard mortgages
Because the exit is defined, lenders can often make quicker decisions, which is critical when deadlines are tight.
Risks and Considerations
Closed Bridging Loans are short-term solutions and are not designed for long-term borrowing. Interest rates are higher than standard mortgages, reflecting the speed and flexibility involved.
Borrowers must be confident that the exit strategy will be completed on time. Delays can result in additional costs or extension fees.
If further borrowing is required against an existing property, some borrowers may also explore Second Charge Mortgages.
Why Use a Broker for Closed Bridging Loans
Using a broker helps ensure the loan is suitable for your situation. A broker will assess whether a closed bridging loan is appropriate, review the exit strategy, and compare lenders across the market.
At Connect Mortgages, advisers understand specialist lending criteria and work with a wide range of bridging lenders. This helps reduce risk and improve outcomes.
If you would like to discuss your options, please contact our team.
Connect Mortgages and the Connect Group
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