Closed bridging loans
Need a faster way to close your property deal? Discover the short-term funding option for buyers with a set completion date.
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What is a closed bridging loan?
You've sold your house. You've found your next one. But there's a gap between the sale and the purchase - and you need the cash before it actually lands in your account. Sound familiar? This is where a closed bridging loan can step in and save the day.
A closed bridging loan is a short-term loan with a fixed date for repayment, so you already know exactly when - and how - you'll repay the loan. It's called fixed a "closed" loan because there's a clear end in sight, typically because you’ve got a deal in place, like a property sale, and you're just waiting for it to go through.
Lenders often offer these loans because they carry less risk. You've already exchanged contracts or have guaranteed funds on the way. Because of that, closed bridging loans usually come with lower interest rates and better terms compared to open ones.
Why people choose closed bridging loans:
- You've exchanged contracts and have a clear completion date
- You need short-term funding to finalise a new purchase
- Lenders are more confident, so rates are usually better
When might you need one?
Closed bridging loans are most useful when timing is tight and everything's in motion - but not quite lined up yet. Here are a few common situations where they help:
Property chains with a delay
You're part of a chain, and one leg of it is lagging behind. You've exchanged but can't complete the purchase of your next home until your buyer finishes their own sale. A closed bridging loan keeps things moving without you losing your dream house.
Downsizing with a completion date
If you're selling a larger property to move into something smaller - and you've exchanged contracts - a closed bridging loan gives you the money now, ahead of the final sale. That way, you can settle into your new place without rushing the move.
Buying at auction with funds pending
Let's say you’ve won a property at auction and must pay within 28 days. You’ve already sold another asset (like another property or shares), and the money is due soon. A closed bridging loan lets you pay for the auction property now, then repay the loan as soon as your funds come in.
What to know before you apply
You need a clearly defined exit strategy
With a closed bridging loan, you need to show the lender you have a well-defined repayment strategy. This is usually through the sale of a property, release of inheritance, or some other payout that gives you a predetermined repayment date. This isn't not just about intention - it needs to be lined up and near completion.
The loan term is usually short
Closed bridging loans are designed to be quick. Most terms are six months or less, sometimes stretching to a year, but generally they’re not meant to be long-term solutions.
You can roll up the interest
Instead of paying interest monthly, you can often "roll it up" - meaning it’s added to the total amount and repaid all at once when the loan ends. This can be useful if you don’t want to worry about monthly repayments during the bridging period.
They’re secured loans
Just like most bridging finance, closed bridging loans are secured against property - usually the one you’re selling, buying, or both. If you don’t repay, the lender can repossess the property, so it’s important to be certain of your timeline.
They’re faster than mortgages
Bridging lenders can move quickly - often within days - because they don’t require the same checks as standard mortgages. This makes them ideal in time-sensitive situations, like auction purchases or chains of buyers and sellers.
Summing up
A closed bridging loan is a handy solution when everything’s almost lined up and you just need a little cash and a little time to complete the puzzle. They can be ideal when you’ve exchanged contracts or have guaranteed funds on the way.
Compared to open bridging loans, closed options are often cheaper and more straightforward - but only if you've worked out a clear exit strategy. Before applying, make sure all the moving parts are in place, and consider talking to a bridging loan broker to help you find the best deal.
Frequently Asked Questions
What’s the difference between a closed and open bridging loan?
A closed bridging loan has a fixed repayment date and a guaranteed exit (like a completed sale), while an open bridging loan doesn’t. Open loans are more flexible, but usually come with higher interest rates.
How quickly can I get a closed bridging loan?
Lenders can typically release funds in a few days to a couple of weeks, depending on how prepared you are with documents, valuations, and legal checks.
Do I need to have exchanged contracts to get one?
In most cases, yes - especially if you’re using a property sale as your repayment method. Lenders want to see a legally binding deal in place to be confident you can repay on time.
Can I get a closed bridging loan with bad credit?
Yes, you can get a closed bridging loan with a poor credit history, but it may come with higher interest rates and stricter terms in the loan agreement.
Are closed bridging loans suitable for property investors?
Closed bridging loans can be suitable for developers and property investors, especially when there's a clear exit strategy like a confirmed sale or refinancing.
About the author
Lawrence Howlett
Lawrence Howlett brings a results-driven mindset to his writing, shaped by over a decade of experience across finance, legal, and energy sectors. As the founder of Moneysavingadvisors, he’s built a reputation for turning complex financial concepts into clear, actionable insights for consumers. His writing stands out for its clarity, structure, and focus on delivering value.
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