fbpx

What’s the difference between a Closed and Open Bridging Loan?

A closed bridging loan is when a mortgage applicant knows the date that they must buy the new home and the date that their old home will settle. You will have to purchase your new home first but know exactly the date that you need the bridge for.

An open bridging loan is when you must purchase your new home but have no definite offer on your old home.  The bank must, in this case, assume that you aren’t going to be able to sell it so needs to calculate as though you keep it as a rental property.  Open bridging loans are very difficult to fund if you don’t have enough income to pay the entire mortgage.

Related Articles

Buying a home with friends

With house prices at record heights and not everyone having access to help from the Bank of Mum and Dad, many Kiwis are asking whether it is worth buying with…

Read More

It’s the time of the year when the Mortgage Lab buffs up our Crystal Ball, gazes into the infinitely complicated world of economics, and comes up with sufficiently generic interest…

Read More

The Official Cash Rate (OCR) explained

What is the Official Cash Rate? The Official Cash Rate (OCR) is an interest rate set by the Reserve Bank of New Zealand. To be specific, it is the interest rate…

Read More

You’ve got a fixed-term account maturing soon and the bank or your broker has sent you some interest rates. Maybe your current bank is offering 0.1% higher than another bank…

Read More