End of the closed bridge?

End of the closed bridge?


In the old days of easy credit and mortgages for everybody, a closed bridge was a simple matter. If contracts had been exchanged between the client and a buyer, it was known as a “closed deal”. In these tumultuous times however, it has become more complicated. 

As Jonathan Caplan from bridging finance company Lowry Capital explains: “The vast majority of our business is open ended, as closed bridging is almost non existent these days. We have a lot of brokers coming to us with so-called ‘closed bridges’, where their client and the purchaser have exchanged contracts. In the current climate you simply can’t rely on these kinds of contracts – they have become virtually meaningless.”


In today’s market, when a buyer is faced with losing their 10% deposit or40% of the value of the house, it is now clear that exchanging contracts doesn’t carry the same significance it once did.


Mr Caplan went on to say: “With consumer confidence very low, more people are walking away from agreements at the last minute, plus you hear stories of mortgage offers being pulled on the day of completion, brokers need to check through deals carefully as closed bridges aren’t what they used to be.”


So what does make a closed bridge in these uncertain times? Lowry Capital says that confirmation from a solicitor is now the only sign of a closed bridge. When a solicitor can confirm that the security has been sold, the exchange has taken place and completion is near, that is what constitutes a closed bridge.


John Maclean, managing director of Link Lending confirmed: “Previously a bridge would have been considered closed where a solicitor confirmed exchange of contracts with deposit paid or occasionally if the borrower had a non-conditional mortgage offer issued. However, bridging lenders are now much more cautious of this approach as so many offers have been subsequently withdrawn, or lenders have simply stopped lending!”

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