Open Bridging Vs Closed Bridging Finance
Like any other kind of finance today, bridging loans are often more complex than they might appear on the tin. For example, did you know that you get two different forms of bridging loan; open, and closed?
A closed bridging finance deal is one where the lenders knows exactly what will be paid back, and when. It’s known to them how you will manage the payments, and it will make it much more likely for you to get the loan if you can provide the ample needed proof. They are usually more specific and secured, and thus come with the benefit of lower interest rates for being able to prove that you fit in with their criteria.
It’s less risk to the borrower, and thus is a very popular option for those who can provide the needed information
An open bridging loan, though, is very much different. Open bridging is available for those without a clear exit strategy. You don’t need to know exactly the path you will take to pay it off; you need only secure a date of repayment.
Most of the time, this will be seen as a higher risk option for the lender and thus they may choose not to give you the investment. That’s usually also tied in with the fact that you would be expected to pay the loan back at a quicker period of time than beforehand or risk paying large fees for missing your payment date.