Difference between Closed and Open Bridge finance?

[jamandco]

Hi All

Warmest wishes to you and your families,

I have 2 questions if anybody can help please

1/ What is the difference between closed bridge and open bridge financing?

2/ What scenario would each one be used in?

thanks once again for all the invaluable info !

regards

Michael

[Kingswood]

Hi,

Closed bridging is when an exit route is in place, meaning there is a set repayment source and date. Open bridging means that the repayment vehicle is as yet unknown.

A closed bridge may be used when someone is moving house, having exchanged with the purchaser of their current property and the vendor of their future property but not completed with either. The purchaser is taking a while to complete so in order to ensure that the delay doesn't jeopardise their purchase of the new house they take out a closed bridging loan, the repayment being the cash from their existing property as soon as the sale completes.

For a landlord the use of a buy to let mortgage is often the repayment source for properties bought using bridging finance.

An open bridge is used more for a opportunity that cannot be missed and has to be financed ASAP. They are also used on properties where work or a conversion is taking place.

If you need any further help or would like to discuss your bridging finance options then feel free to call us on 0845 230 3 230.

Hope this helps.

[Molly's dad]

Closed Bridging is also used by BMV traders when they purchase a property BMV (below market value).

They use closed bridging to purchase and then they re-mortgage, thus paying off the closed bridging with the re-mortgage.