Closed or Open Bridging Loan: What a Signed Contract Changes
Closed or open bridging loan? What an unconditional contract of sale changes about your loan to value ratio, your term, and whether a lender takes you.
Property Lending Hub
Closed Bridging · Contract of Sale · Property
Every explainer says an open bridge costs more. On the lenders that publish their policy, the bigger difference is not the rate. It is how much they will lend, how long they will give you, and whether they will look at you at all.
Quick Answer
A closed bridging loan is one where your existing home is already under an unconditional contract. An open one is not. On the short term products reviewed, that does not change the published maximum or the price. It changes how your exit strategy is judged, and how long you get.
Part of the bridging finance guide, alongside what happens when a bridge expires.
Also called: closed bridging, closed bridging finance. The words describe the same facility in two different positions, one where the outgoing property is already under contract and one where it is not, rather than two separate loan products.
What is the difference between a closed and an open bridging loan?
Two labels, one facility. A closed bridging loan is one where the property you are selling is already under an unconditional contract, so the lender knows the date the loan ends, and an open one is written before that contract exists. The distinction describes your position, not a different product.
That matters because of how the pair is usually presented. Most pages that carry these two words define them and stop there. They tell you that closed means sold and open means not sold, and they leave you to assume that two labels must mean two products with two price lists. On the lender pages read for this insight on 14 September 2026, they do not. The same short term loan facility covers both, and the contract, when it arrives, arrives inside the term.
So the useful question is not which one you are being offered. It is which parts of a lender's assessment move when the contract exists and which parts do not, because that is where the real difference sits, and almost nobody publishes it.
Does an unconditional contract of sale get you a higher percentage?
On the four non-bank bridging loan products read for this insight, no. Not one of them published a maximum percentage that moves with contracted status. What does move the published maximum, on the product that publishes more than one, is the term you choose rather than whether you have sold.
| Lender class | Maximum percentage published | Does that maximum move once you are under contract? | Will it lend before you have sold? |
|---|---|---|---|
| Non-bank lender A | Up to approximately 85 per cent on the shorter term, and approximately 80 per cent on the longer one | No. The published maximum moves with the term chosen, not with the contract | Yes. The product is built and marketed around buying before selling |
| Non-bank lender B | Up to approximately 80 per cent, measured on the combined debt at its highest point | No published difference | Yes, stated on the product page |
| Non-bank lender C | Up to approximately 80 per cent of the combined property value | No published difference, and this is the one page that defines closed and open at all | Yes, with a documented repayment plan |
| Non-bank lender D | Around 70 per cent on a standard residential security, published through its own calculator | No published difference | Yes |
| Major bank, where still offered | No maximum published on the page read | Not published | Yes. The page does not require the existing property to be sold first |
Read the third column across and the pattern is the interesting part. These are four lenders with four different appetites, ranging from around seventy per cent on a standard residential security to approximately eighty 5 per cent at the short end of the term range, and none of them attaches a number to the contract. The percentage is set by the security and the term. The contract sits somewhere else entirely.
It helps to know what the percentage is measured against, because it is not the new purchase on its own. It is the combined position at its highest point, which lenders call peak debt, before the sale proceeds come in and pay it down. Two people borrowing the same dollars against the same two properties can land on very different percentages depending on how the outgoing property is valued, which is what lenders actually look at first on a file like this. If you are weighing this against a second registered mortgage or a caveat rather than a bridging loan, the three instruments are compared side by side in our guide to bridging, caveat and second mortgage finance.
Will any lender decline you outright for not having sold yet?
Not on the non-bank products reviewed. None of the four required an unconditional contract of sale as a condition of lending, and two of them are marketed specifically at buyers who have not sold, which is the opposite of a gate. The major bank page read alongside them did not require it either, and published a maximum loan term of 12 months without publishing a maximum percentage at all.
There is a structural reason the policies in this market sit so far apart, and it is worth knowing before you read anyone's page as though it were the rule. The prudential guidance that shapes how banks approach residential lending, APRA's Prudential Practice Guide APG 223 Residential Mortgage Lending, in the version effective 19 June 2025, states that it applies to authorised deposit-taking institutions as well as to other APRA-regulated institutions that may have exposures to residential mortgages. The serviceability buffer of at least 3 per cent that borrowers hear quoted is an obligation of those institutions, set under a prudential standard. Read the guide end to end and the word 'bridging' does not appear in it once.
So the non-bank lenders in this lane are not working to a published bridging loan rule, because there is not one. They are each working to their own credit policy, which is why the spread between them is so wide and why a rejection at one tells you very little about the next. For business owners running this decision alongside a purchase date, the sequencing is worked through in our guide to buying before selling when you are self-employed.
Is price the real difference between the two, or is it something else?
Price is the answer you will read most often and it is the one the lender pages support least. Across the four products reviewed, not one published a rate that differs according to whether the outgoing property is under contract. The one published price difference that did turn up on a product page had nothing to do with contracted status at all. It was the choice between prepaying the interest and capitalising it, and the published gap between those two was small, in the order of fifteen hundredths of a percentage point, indicative and undated on the page itself.
What a signed contract does change
- The repayment date stops being a forecast and becomes a date
- The valuation of the outgoing property carries less of the file
- The term you actually need usually gets shorter
- An extension conversation, if you need one, starts from evidence
- Your fallback question changes from if to when
What it did not change on the pages reviewed
- The published maximum percentage, on all four products
- The published rate, on all four products
- Whether the lender would look at you at all
- The published term band
- The definitions themselves, which are published with nothing attached
The numbers side of this, the rate bands, the establishment charges and how a term sheet is actually read, is separate work and this insight deliberately does not repeat it. What belongs here is the shape of the thing: a signed contract is not a discount, it is a reduction in the amount of explaining your file has to do. If you want that tested against your own figures rather than against a general rule, you can check eligibility and have the position looked at properly.
How long can each one run?
Between six and twenty 4 months across the products reviewed, and the term is published as a flat band on every one of them rather than as two bands for sold and unsold borrowers. The longest terms come with the lower maximum percentage, which is the trade the pages actually publish.
| Lender class | Term published | Does the term change with a signed contract? | What happens at the end |
|---|---|---|---|
| Non-bank lender A | Up to approximately 24 months, with the higher percentage attached to the 12 month option | No published difference | Repay or refinance |
| Non-bank lender B | Up to approximately 24 months | No published difference | Repay or refinance |
| Non-bank lender C | Approximately 6 to 12 months | No published difference | Repay or refinance |
| Non-bank lender D | Short term by design, sized to the exit rather than to a published band | No published difference | Repay or refinance |
| Major bank, where still offered | A maximum of approximately 12 months on the page read | Not published | Repay or refinance |
The term is the number most worth getting right, because it is the one you cannot quietly renegotiate later. A 12 month facility taken against a property you have not listed is a different proposition from the same 12 months taken with a settlement date already in the contract, even though the paperwork looks identical and the published band is identical. Where the two dates almost line up but not quite, a deferred settlement on one side of the transaction is sometimes the cheaper fix than a longer loan. What happens if the term ends and the property still has not sold is its own subject, and it is covered separately rather than here.
What does conditional approval actually mean before you list?
Conditional approval before you list is an indication based on the figures you have given, not a commitment to fund, and the condition that matters most is usually the valuation of the property you have not sold yet. It tells you the lender is willing in principle. It does not tell you the amount survives contact with a valuer.
One of the products reviewed publishes the trigger for its conditional offer, and it is worth reading carefully because the direction surprises people: the offer is available once you have a contract of sale, or a property you intend to bid on at auction, on the property you are buying. That is the opposite end of the transaction from the contract this page has been discussing. When I take a file like this to a lender, that is the distinction that most often has to be untangled first, because a borrower who has been told to get a contract of sale frequently thinks it is the one on the home they are leaving.
Treat conditional approval as permission to bid, not as money in the account, and keep the fallback current the entire time. That fallback is the exit strategy in the credit sense, and it is what lenders actually look at first when the contract you are relying on has not been signed yet.
Closed and open are descriptions of where you stand, not two products with two price lists. Across four non-bank bridging loan products and one major bank page read on 14 September 2026, none published a maximum percentage, a rate or a term band that moves with contracted status, and none required an unconditional contract of sale before it would lend. What the contract changes is the quality of the exit the lender is underwriting, which in turn changes the term you need and how much of the file rests on a valuation. If you want the lane rather than this one question, start at the property lending hub, and our private lending page sets out how the non-bank and private short term lanes are priced and secured.
Key takeaway: A signed contract of sale is not a discount, it is a shorter, better evidenced exit, and that is what actually moves a bridging loan decision.Frequently asked questions
A closed bridging loan is a bridging loan taken out when your existing property is already under an unconditional contract of sale with a known settlement date, so the lender can see exactly when and how the loan gets repaid. An open one is taken out before that contract exists, which means the repayment date is a forecast rather than a date. Neither is a separate product on the lender pages reviewed for this insight, and both sit inside the same short term loan facility. The label describes your position, not a different loan.
You do not need a contract of sale to get a bridging loan on any of the four non-bank products read for this insight, and none of them published such a requirement on 14 September 2026. Two of the four market the loan specifically at buyers who have not sold yet. What replaces the contract is evidence, so the lender looks for a realistic price, a listing plan and a fallback, which is the exit strategy in the credit sense of the term.
You can get a bridging loan before you list your home, and this is the ordinary case rather than the exception on the non-bank side. The trade is that the lender is pricing and sizing against an unlisted property, so the valuation and the sale assumptions carry more weight than they would with a signed contract in the file. If you are a business owner working to a purchase date, the sequencing questions are worked through in our guide to buying before selling when you are self-employed.
Switching from an open to a closed bridging loan is not usually a switch at all, because on the products reviewed there is one facility and the contract simply arrives during its term. What changes on the file is that the repayment date stops being an estimate, which matters if you later need an extension or a variation. Where the structure itself needs to change, that is a different instrument, and the comparison is set out in our guide to bridging, caveat and second mortgage finance.
A signed contract of sale changes the deal in ways that do not show up in the published numbers, because it removes the largest assumption in the file and fixes the date the loan is built around. On the pages reviewed it did not raise a published maximum or lower a published rate. It changes how much explaining your file has to do, and it changes the conversation about a deferred settlement if the two dates do not line up.
FBAA Accredited
