Closed Bridging Loans: Secure Your Financial Solution

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What is a bridging loan?

A bridging loan is a short-term financing option used to “bridge the gap” when someone needs money quickly, often to purchase a new property before selling their existing one. Bridging loans provide immediate cash flow until more permanent financing can be secured. Bridging loans have higher interest rates than traditional mortgages.

There are two main types of bridging loans:

Closed Bridging Loans.
Open Bridging Loans.

What is a closed bridging loan?

A closed bridging loan is a type of short-term financing where the borrower has a fixed date for fully repaying the loan.The lender will work with the borrower to understand their “exit strategy” – where the money to repay the loan will come from and when. If the borrower can provide a definite repayment date, the loan will be classified as a closed bridging loan.Closed bridging loans typically have:

Interest-only repayments
Maximum loan-to-value (LTV) of around 75% of the property’s value
More competitive interest rates than open bridging loans, as the lender’s risk is lower

The fixed repayment timeline and lender’s reduced risk make closed bridging loans a more affordable option compared to open bridging loans, which have more flexible repayment terms.

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Repayment terms for closed bridging loans

Closed bridging loans have a more structured and fixed repayment process compared to open bridging loans. Here are the key details on the repayment terms for closed bridging loans:

FIXED REPAYMENT DATE: The defining feature of a closed bridging loan is that it has a predetermined repayment date agreed upon upfront between the borrower and lender. This date is typically tied to a specific event, such as the completion of a property sale.
INTEREST-ONLY PAYMENTS: During the loan term, the borrower makes regular interest-only payments to the lender. The full loan amount is then repaid in a lump sum on the agreed repayment date.
PENALTIES FOR LATE REPAYMENT: If the borrower is unable to repay the loan in full by the fixed date, the lender will likely charge additional penalty fees. This provides an incentive for the borrower to repay on time.
EARLY REPAYMENT ALLOWED: Many closed bridging loans allow the borrower to repay the loan early without incurring penalties, providing some flexibility. This can be beneficial if the borrower’s situation changes and they are able to repay sooner than expected.
LOWER INTEREST RATES: Because closed bridging loans have a fixed repayment structure, lenders view them as lower risk compared to open bridging loans. This allows them to offer more competitive interest rates to borrowers.

TRY OUR BRIDGING LOAN CALCULATOR: PLAN YOUR FINANCES WITH PRECISION

Wondering how much a closed bridging loan might cost you? Our user-friendly Bridging Loan Calculator is here to help. This powerful tool allows you to:

Estimate your monthly payments
See the total cost of your loan
Adjust loan amount, interest rate, and term length
Compare different scenarios instantly

Simply input your loan details, and our calculator will provide you with a clear breakdown of costs. It’s a quick and easy way to gain insight into your potential financial commitment before speaking with our expert brokers.

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Application process for closed bridging loans

Closed bridging loans have a more structured and fixed repayment process compared to open bridging loans. Here are the key details on the repayment terms for closed bridging loans:

1. Initial consultation

We’ll start by discussing your specific financing needs and goals. This allows us to understand your situation and determine if a closed bridging loan is the right solution.

2. Gather required information

To submit your application, we’ll need details about your exit strategy, including:

Confirmed sale date for your existing property
Details on the new property you are purchasing
Proof of funds for the repayment (e.g. sale proceeds, refinancing)

We’ll also collect standard documentation such as:

Personal and/or business bank statements
Proof of income
Asset/liability statements
Property portfolio details

3. Lender submission and underwriting

With the completed application and supporting documents, we’ll shop your case to our network of closed bridging loan providers. The lender will assess your creditworthiness and the viability of your exit plan.

4. Formal loan offer

Once approved, the lender will provide a formal loan offer outlining the agreed terms, including:

Loan amount
Interest rate
Fixed repayment date

5. Solicitor instruction and completion

We’ll work with you and the lender’s solicitors to get the closed bridging loan formally instructed and completed. This includes conducting property valuations and finalizing all legal paperwork.

6. Ongoing support

Throughout the process and during the loan term, we’ll be available to provide guidance and ensure a smooth experience. We’ll also monitor your repayment progress and help you transition to long-term financing when the time comes.

The key benefit of working with a broker like ourselves is access to a wider range of closed bridging loan options and expertise in navigating the application process efficiently. We’re here to secure the most competitive terms and ensure your financing needs are met.

SECURE YOUR CLOSED BRIDGING LOAN TODAY!

Don’t let financial gaps hold you back. Our expert brokers specialize in closed bridging loans, offering tailored solutions to meet your unique needs. With years of experience and a deep understanding of the market, we’re here to guide you through the process, ensure competitive rates, and help you achieve your financial goals. Take the first step towards your secure financial future. Contact us now for a personalized consultation.

What are the differences between open and closed bridging loans?

The main distinction between open and closed bridging loans lies in the flexibility and cost of the repayment terms. Understanding the differences between these two types of bridging finance can help you choose the right option for your specific needs.

Open bridging Loans

Have a more flexible repayment date, allowing the borrower to repay the loan at any time within a 12-month period.

Typically have higher interest rates compared to closed bridging loans, as the lender takes on more risk with an open-ended repayment schedule.

May be more difficult to obtain, as lenders view them as riskier due to the uncertain repayment date.

Provide flexibility for borrowers who are unsure when they will have the funds available to repay the loan, such as waiting for a property sale or other source of funds.

Closed bridging loans

Have a fixed repayment date agreed upon by the borrower and lender, often tied to a specific event like the completion of a property sale.

Typically have lower interest rates compared to open bridging loans, as the lender takes on less risk with a defined exit strategy.

Are more likely to be accepted by lenders, as they have greater certainty about the repayment date.

Suit borrowers who have a clear plan for repaying the loan, such as a confirmed property sale or other source of funds becoming available by a specific date.

When choosing between an open or closed bridging loan, consider the following factors:

How quickly you need to access the funds and complete the purchase.
When you expect to have the funds available to repay the loan, such as from the sale of a property or other source.
Whether you prefer the flexibility of an open loan or the lower interest rates of a closed loan.

If you’re unsure which type of bridging loan is best for your situation, it’s always advisable to seek professional advice from a qualified bridging loan broker. They can help you find the most suitable finance solution based on your specific needs and exit strategies.