Types of Bridging Loans
Our criteria for bridging loans depend on which funding partner or lender we use. This means it is not possible to give accurate bridging loan rates and costs without speaking with you directly.
Bridging loan rates can be determined by many factors, such as whether the bridging loan is closed or open. Closed loans have a guaranteed exit route, attracting a lower interest rate than an open loan, which has a less defined exit plan.
The size of the loan compared with the value of the property (Loan to Value, or LTV), the type of security (residential property is currently a safer bet than commercial), and the applicant’s credit history will all have an effect on the amount of interest that will be charged to the borrower.
Common uses for bridging finance are when buyers find their ideal property for sale but have yet to sell their existing property. In this case, a closed bridging loan occurs when the present property has been listed for sale, sold, and exchanged but has not yet been finished. The lender will consider this loan to be low-risk. If the current property has not yet been sold, this is considered an open bridging loan; this sort of loan is considered more risky.