Open bridging loans
Find the extra time and flexibility to complete a property deal - even without a completion date in sight.
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What is an open bridging loan?
Sometimes life moves faster than the paperwork. You've found your dream home, but your current one hasn't sold yet. Or maybe an opportunity's landed on your lap and you need the funds this week, not in a few months. That's where an open bridging loan might come into play.
An open bridging loan is a temporary loan that helps you borrow money to "bridge the gap" while you wait for longer-term finance. Unlike closed bridging loans (where you know exactly when you'll repay), open bridging loans don't have a fixed repayment date. In this sense, they're more flexible - perfect if you're still waiting to sell a property or arrange your finances.
Say you've found a new home but haven't sold your old one yet. You could take out an open bridging loan to cover the purchase of the new home. Once your old home sells, you would use the money from the sale to pay off the loan.
Because the lender doesn't have a guaranteed repayment date, they'll usually want to see a clear exit strategy - like your property being on the market or mortgage approval in progress.
Why people choose open bridging loans:
- You're not under pressure to repay by a specific date
- You need money quickly to secure a new property
- You're confident funds are coming but don't have them yet
When might you need one?
There are a few common situations where an open bridging loan can makes sense:
Buying before you sell
This is the key reason people choose open bridging loans. You may have found the perfect home but your own sale is yet to go through. You don't want to lose out, so an open bridging loan gives you the funds to buy now and repay later when your current home sells.
Property auctions
If you win at a property auction, you'll often find you need to pay within 28 days. If you're still arranging a mortgage or waiting on funds, a bridging loan can cover the gap.
Investing or buy-to-let
If you're diving into the property market or investing in a commercial building, an open bridging loan could help you to move quickly while you finalise long-term financing or rental income.
Renovating a fixer-upper
You might be looking into property that's not mortgageable yet due to its condition. An open bridging loan can fund the purchase and renovations until a lender approves your traditional mortgage.
Before you apply for a bridging loan
Bridging finance has its pros and cons. Here are the main things to consider before you take the plunge:
They're a short-term finance option
Most open bridging loans are a short-term financial solution, lasting between a few months to a year. Some may go up to 18 months, but generally they're not meant to be long-term solutions.
Interest can be higher than elsewhere
Because lenders are taking more risk (particularly as there's no fixed repayment date), interest rates on bridging loans are usually higher than with regular mortgages, especially if the loan period is on the long side. That said, you can often "roll up" the interest and pay it all at once at the end of the loan period.
You'll need a solid exit strategy
Even though the loan is open-ended, lenders still seek formal reassurance that you'll repay. They'll want to know how - and when - you plan to clear the loan. Selling a property, refinancing, or receiving a large payment (like an inheritance or bonus) are all common exit strategies.
They can be secured against your home
Most bridging loans are secured loans, meaning your home (or another property) is used as collateral. If things go wrong and you can't repay, you could risk losing your property - so it's important to be fully confident in your exit plan.
Summing up
An open bridging loan can be a lifesaver if you need flexibility, fast access to cash, and time to line up your finances. Whether you're moving house, buying at auction, or investing in property, it's all about bridging the financial gap between now and your next big move.
Be sure to understand the risks, have a clear repayment plan, and compare your options before diving in. You can also work with a bridging loan broker to navigate the market and thoroughly explore your options.
Frequently Asked Questions
How is an open bridging loan different from a closed one?
An open bridging loan doesn't have a set repayment date, while a closed loan does - usually because the borrower already has a sale completion date or confirmed funds on the way.
What are the alternates to open bridging loans?
Aside from a closed bridging loans, the common alternatives include traditional mortgages, commercial loans, personal loans, and home equity loans. These options offer different terms, with mortgages and commercial loans usually lasting longer, while personal loans and home equity loans may be more flexible.
Can I get one if I already have a mortgage?
Yes, you can borrow a second charge bridging loan, meaning it sits behind your existing mortgage. Bear in mind that your current lender (your mortgage provider) gets paid first if anything goes wrong.
Can I get a commercial open bridging loan?
Yes, you can. Lenders of commercial bridging loans will assess your financial situation and the loan-to-value ratio on the property, as well as your credit history and your plan for repayment. Being business related, they may also look at the property's income potential and your overall investment strategy.
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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