Many house buyers experience an awful situation where their dream home is discovered but their current property is not sold yet. Or maybe it is on the market but a worthy buyer is not found yet.

This would mean a lower price for selling their current house quickly in order to shorten the time between two settlement dates which is again a stressful scenario.

Whilst everyone sees very little options in this situation, availing a bridging loan can allow the property purchasers to act positively and confidently, purchasing their dream home before the current one is sold and in most cases capitalising on the situation.

A short–term bridging loan allows home buyers to buy or upgrade properties easily. They don’t need to coordinate settlement dates or find interim housing and will be ready to buy from the moment you enter the highly competitive property market.

Where can you get the Bridging loan?

You will get many options to get bridging loan for your emergencies. It is your choice which option you will select to get the loan. There are several bridging loan provider companies and local bodies are available who can provide you financial help on your bad time.

You must approach the trustworthy person or company who are capable to provide required money instantly. You can also surf the internet to know about nearest Bridging loan companies. You will get to know about all other requirements of these companies after approaching them.

Types of Bridging Loans

We can classify Bridging loans into two categories, one is the Closed Bridging loan and another is Open Bridging loan. Types of bridging loan are classified according to their names and categories.

You will come to know more about these loans from loan Provider Company. It is very necessary to clarify all the things to your loan provider like the cause of loan, amount you needed and time you required to return the amount.

• Closed Bridging loans: These types of loans are given for a limited time period. You have to return the amount according to the time given in your contact. These loans are for those peoples who can pay the return amount within short of time. The interest rates of this type of loans are lower than the open bridging loan. Usually, businessmen and other such persons avail this type of loan.
• Open Bridging loan: You can guess the definition of this loan with its name. There are no time limits to return the amount. This type of loan is very beneficial if you are going to get much benefit from the loan amount. The interest rates of the open bridging loan are quite higher than the closed bridging loan. You have to pay higher interest rates due to facilities providing by Bridging loan companies.

Bridging Loan Process

How much money can you take as Bridging loan?

It is not decided in advance that how much money you can take a bridging loan. The terms and conditions of every company are little different from each other.

You can get the loan nearly equal to the price of the property or anything that you are using as security. Some companies are using the Bridging loan calculator to calculate the loan for customers. You will come to know all the details after getting in touch with the loan provider.

How does Bridging Finance work?

A bridging loan or bridging finance is whilst you borrow the funds required to settle the assets being bought you keep the existing mortgage for your present-day home.

Mortgages are held by the same lender over both estates. The lender then permits interest to accrue at the bridging portion of the mortgage for up to 6 months giving the borrower time to sell their first property.

The total amount borrowed plus an allowance for interest is referred to as the ‘Peak Debt’ and after selling the first property, the net proceeds are used to reduce the overall mortgage amount. The closing debt is referred to as the ‘End Debt’ and is then transformed into an ordinary loan product.

Lenders work things out pretty differently. However, the traditional rule that the borrower only has to be able to prove that they can service the End Debt not the Peak Debt.

You will typically have the possibility to make repayments on the existing loan or proposed End Loan even as the bridging component has the interest capitalised on the mortgage until the present asset is sold.

Read more: 10 Reasons for Small Businesses Availing Bridging Loans

Who Needs Bridging Loans?

Mostly, bridging loans are required by landlords and amateur property developers, including bidders purchasing a lucrative property deal at an auction where a loan is needed quickly. They may also be offered to fat borrowers who want effortless lending on residential and commercial properties up-gradation and developments.

Policy for Lending Assessment

When assessing the money, the lenders will look at the equity in your current home. The maximum Loan: Valuation Ratio is generally 80% to 90% depending on the moneylender.

Most of the lenders offering commercial and residential short-term bridging finance dispense the maximum amount on the condition that there is an End Debt.

However, in cases where there will not be an End Debt such as when you are moving into a less costly house, the fees associated with your loan will generally be greater.

Moneylenders may require proof of selling the current property as a pre-requisite for loan approval. It can be a copy of the sale contract.

Risks in Bridging Loan

Rates on bridging loans are now quite similar to any standard home loans provided by any private or government lender but interest will be accruing during the time it takes to sell your current home. Do not overestimate the selling price of your current property and get a property report or get its accurate valuation through any property evaluator agencies.

Mr. Grégory THUAN DIT DIEUDONNÉ, very reputable lawyer and founder of Avocat International, advices the earlier you sell your property the better it is for your pocket – don’t delay – be decisive and think with your brain and not emotionally.

Benefits of Bridging Finance

Bridging finance can be ideally suited to the builders, developers, investors and individual buyers to act instantly after locating the desired property and can capitalise on the opportunity.

Buying a lucrative property deal before selling the existing home can become easy by availing a bridging loan from various financial institutions available in the property market. Also, a bridging loan helps you to move home in an ideal manner; you will always have a home and you don’t have to coordinate settlement dates.

Move into your new property first and sell your first one later.

Read more: 9 Tips for buying a property at auction

Why do you Need a Broker?

Every lender has a different policy and ways of assessing bridging loans and it is quite diverse. Some lenders require the loan acquirer to be able to service the peak debts interest while others don’t offer bridging loans at all without looking at the entire peak debt.

A genuine and reliable broker is one who offers bridging loans only by seeing the end debt.

The thumb rule suggests that you will need at least 50% equity in your existing home before applying for a bridging loan for your property upgrade.

A broker will also assist in gauging the best option according to your circumstance.

Total cost of return

The total cost of return will be calculated after adding total interest. The loan provider company will give you the details of the interest rates while providing a loan. The interest rates on Bridging loans are much expensive than simple loans.

Ways of interest:

• Monthly interest: You have to pay the interest according to your interest rates per month. The balance of the loan will remain same.
• Rolled up Interest: In this type of system, you have to pay all the interest at one time. You have to pay the whole interest when original rent repaid. There are no requirements of paying rents monthly but the rent will be keep added every month.
• Retained interest: In this type, customers also borrow interest from the bridging loan company or bridging lender when applied for the loan. A customer can pay monthly interest on this borrowed money.

Tips No. #1 For capturing an investment opportunity

During crucial commercial deals, time is of the essence and often fast investment is a necessity; for buying a new venture or acquiring any other enterprise. Bridging loans may be organised in extraordinarily tight timescales – mostly within a few days and that’s difficult to overcome with any other traditional commercial loan.

Tips No. #2 For Enlarging Commercial Operations

A commercial enterprise seeking to amplify might also want to purchase more tools or specialised equipment, for instance, so as to get admission to new markets or areas. In such cases, bridging finance can regularly offer the funding needed to attain the business objectives.

Tips No. #3 For Refurbishments

A bridging loan can be a great answer for refurbishing office or retail space owned by the company, as normally it is going to be repaid when the premises are remortgaged following the uplift in value. From light refurbishment to add grace, to predominant redevelopment, bridging finance may be arranged to projects of all sizes.

Tips No. #4 For Refinancing Currently Owed Money

Refinancing can assist small organisations with the aid of consolidating existing debts into one and making them easier to manage. Often, refinancing can assist businesses to pay off lenders and maintain relationships with key providers, which can be critical for the business enterprise’s recognition.

Tips No. #5 For Relocation

A bridging finance may be ideal for companies that are seeking to relocate, purchasing the selected property and additionally supporting with the associated fees, such as removals, furniture and IT. This also helps in avoiding company reserves to fund the relocation, and they are able to pay back the money whilst the relocation is done and the enterprise begins to attain the monetary blessings.

Tips No. #6 For Quick Commercial Completion

Often, bridging finance comes into play in conditions in which mainstream creditors are unable to satisfy the necessary timescales. When a property purchase requires a quick final touch, as an instance, this kind of rapid and bendy funding can fulfil the requirement instantly. Later, this can be refinanced for the longer-term understanding the premises has been secured.

Tips No. #7 For Clearing Urgent Checks

Although the enterprise can also have a supposed outlook of how to shape its debt within the long-time period, every so often it is able to be tough to forecast a shortfall. So when it comes to clearing an invoice, such as tax or enterprise costs, often than not, Bridging Finance is essential in maintaining operations.

Tips No. #8 For Supplying Bridge Funding

Sometimes, even with plans for long-term funding underway, the need for temporary finance crops up. Bridging finance may be a brief answer that keeps other cash waft and overdraft facilities freed up for the everyday operating budget.

Tips No. #9 For Releasing Coins-Drift

Bridging finance can also be a first rate way of creating cash-glide by way of releasing equity; frequently against a residential property. This can be specifically famous with start-ups which have conflicts in getting long-term finance till their enterprise becomes renowned.

Tips No. #10 For Making Smooth Buyout

When possibilities rise up for a buyout, funds are regularly wanted quickly to close the deal and keep away from negotiations being drawn out longer than required. The short period finance can then be repaid and the business finance restructured as soon as the brand new management group is in the position.

Why is an auction better?

1. Vast Variety – Buying a property is like a dream. People wait for years to get their dream home. With the local estate agent you will not get what you actually want, but at auction, you will get an incredible range of properties.
2. No Agent Game – The best thing is that you don’t need any local estate agent; this saves you time as well as money. Just go at auction, bid the competitive price and you will buy your property instantly without any hassle.
3. Total Transparency- There is no chance for fraud or cheat at auctions. Everything happens in front of everyone with clearly mentioned prices which lead to complete transparency in the whole process.
4. Money Saving Deal – When you contact any local estate agent for a property, then you’ll have to pay 2-3% of the total cost; somewhere this is an expensive deal for you. But if you have done your homework well before buying the property, then the auction can fetch you a great money saving deal.

“In an auction, once the gavels goes down, there’s no recourse,” says Corbett

9 Tips for buying a property at auction: UK Auction List

1. Locating a property – Go through paper and magazines and find out the places where auctions are going on. Local agents may also suggest the auction places.
2. Finding the right property – After finding the place of auction, don’t take any decision instantly. Rather, take your time and do more research to find the suitable property. Often people bid on the spur of the moment. It seems to be a bold and brave move, but it doesn’t mean that you will always be right and may lead up in a big loss. So prepare yourself with deep research to claim the best.
3. Viewing the property – After finding the appropriate property, it is advisable to inspect the property on your own. Literally, auction properties may be in a poor state, so it will be better to discuss the estimated cost of property with an architect and builder before bidding.
4. Research – There are unusual ups and downs in the property market, so you should not get indulge in rumours or guesswork. After all, it’s a matter of your hard earn money and your dream home. Be practical and take help from an online and offline analysis. Meet with local people and agents to know every detail of the property before bidding.
5. Legal matters– After showing an interest in a property to auctioneers, covenants or certain legalities could impact the value of the property. So you must go through the legal procedure. Obviously, it is very complicated to digest the legal matter but you’ll have to do it. If  you have any confusion then you must consult with solicitors.
6. Arranging your finances– This is the most crucial stage, you have to make financial arrangement before an auction. You may have to deposit 10% on-spot after winning the bid and remaining 90% within the timeframe proposed by the auctioneer. So if you are short of funds, then you can apply for bridging loans. These loans are instant and require minimal formalities. Discuss all the financial implication with the bank or building society to arrange for the missing amount. Sometimes people may lose their 10% initial amount when they fail to deposit the rest of the balance on time.
7. The property auction- People have better and bitter experiences at auction. Some people find it exciting, but for some it is frightening. So when it’s your day at auction, keep calm and reach the place early. Make sure that you have everything you need. Take your identification documents like passport, driver’s license etc. to confirm your eligibility as a bidder.
8. Bidding- You might face tough competition at the auction. People may bid unreasonably high amount to intensify your heartbeats. Don’t get carried away in such scenarios by calling over your estimated budget. You have already devoted a lot of time in finding your dream home, but any random call may lead you in a massive loss. Stay Calm during an auction!
9. Wrapping it up– Once you have won the bidding and claimed your buying, go through with all the terms and conditions again to make sure that there isn’t any catch or risk involved, especially regarding legal and money concerns. Sign all the legal documents to confirm your claim and inspect the property again just for your own satisfaction. Anyways, it’s your property now and you can check it as a number of times as you desire.

   “The passion of winning a home at a low cost is the thing that keeps mortgage holders and financial specialists returning to auction,”

   

As the name suggests, Bridging Loans are considered as a bridge for the short-term financial support granted by banks and financial institutions to the applicant to replenish the monetary gap between two property transactions. These loans are designed to fulfill a buyer’s financial need to complete the property purchase before selling their existing one or accumulating required funds. Bridging loans prove to be a messiah during many situations pertaining to property trade.

Auctioned Property – Auctions normally require quick completion and it is harder for the purchaser to get a mortgage that soon. This is where the Bridging Loan provides a solution to acquire initial funds to purchase the property until the traditional mortgage is arranged. The loan may take from 24 hours to a few days to get sanctioned depending on the lender and borrower’s financial profile. Ralph Property Finance proved to be a property and finance specialist in the UK who are known for disbursing the loan in a minimal time frame.

New Property – Vendees, who plan to purchase a new commercial or residential holding, prefer to attain Bridging Loans until longer term finances are available. Sometimes during residential property trade, there is also a gap between purchasing a property and its completion. In this critical scenario, the buyer cannot move into a new property as it’s still under construction and cannot sell the current home to arrange for funds.  During such events, Bridging Loans deliver an option to purchase the new house before selling the existing one.

Refurbishment– If the property owner just wants to refurbish the current property, Bridging Loans provide aid in doing so by dispensing urgent upfront cash required. Even if you intend to do a barn conversion or self-building, these loans are considered very useful. You can speak to proficient advisers available at Ralph Property Finance to know how to get a Bridging Loan to reinvigorate your adorable house.

Miniaturize –To make a killing by purchasing a smaller home which is more suitable to your needs instead of the big one you are currently living in, Bridging Loans let you shift to the new copacetic property while getting ample of time to sell your current one to earn a lucrative profit.

Business Projects– Real estate builders and constructors undergo difficulties in maintaining cash flow and tax payments and are more frequent in availing Bridging Loans to invest in their projects. This short-term finance option helps project owners to cover their costs in the urgent phase.

The Golden Deal – Sometimes, property seekers come across an offer which is a distress to leave. Such golden deals can fetch great profits and should not be avoided just because of limited funds available in-hand. Ralph Property Finance has helped plentiful of property falconers in acquiring such deals to earn hefty profits from their property trades, who were once unaware of Bridging Loans and how to get a Bridging Loan?

Types Of Bridging Loan

Commercial and Residential Bridging Loans– It is quite easy to understand with their names that, Bridging Loans taken for the purpose of buying or refurbishing residential properties are Residential Bridging Loans. On the other hand, Bridging loans taken for commercial properties are Commercial Bridging Loans.

Open and Closed Bridging Loans– When the repayment option is not guaranteed, it is known as Open  Bridging Loan. In this type, payment method is undetermined at the initial inquiry. On the contrary, in Closed Bridging Loans, exit route is discussed and agreed upon in the beginning.

First Charge and Second Charge Bridging Loans– When the bank or financial institution owns the right of selling the property to procure the repayment of a loan, it is known as First Charge Bridging Loans. Means, the authority of disposing of the property remains with the lender in the event of loan default. Whereas, a Second Charge Bridging Loan is a subordinate of the first. In the circumstances of loan default, the lender can only recoup the loan payment once the loan borrower sells the property. If someone already had a loan against property and wish to have further funds for a short-term period, Second Charge Bridging Loan is advisable. Skillful loan advisers at Ralph Property Finance explains different types of loans and all the pluses and minuses involved to help the borrower in making the decision.

How to get a Bridging Loan?

Experienced advisers at Ralph Property Finance are considered as the top-notch experts in financial lending in real estate. For many years, Ralph Property Finance delivering guidance and every possible assistance to residential and commercial property buyers to avail the benefits of Bridging Loans in the UK. After a quick scanning of the profile, experts here have tended to complete the case within 48 hours of the submission of the application. Get in touch with any of the proficient consultants available at Ralph Property Finance to understand the procedure and legalities on how to get a Bridging Loan and what are the alternatives.

Must Read: 5 tips for finding the right bridging loan lender

Here are our Ralph Property Finance top tips for making sure you’re all set to buy.

Maximise your savings.

There’s a lot to save up for when it comes to buying your first property. As well as your deposit there’s Stamp Duty, legal fees and any mortgage arrangement fees to cover. With the average UK property now costing an upwards of £204,552, even a 5% deposit could require more than £10,000 in savings.
To give you the best chance of raising the hefty sum you’ll need to get on the property ladder, you’ll need a stern saving plan. Work out the maximum you can afford to save each month and transfer it out of your account on payday so you’re not tempted to spend it. It may mean being economical for a while, but it’s not forever, and a few months of nights in and beans and toast for dinner will seem worth it when you’re in your own home.

Take advantage of first-time buyer schemes.

There are a number of schemes available aimed at helping first-time buyers get their foot on the ladder, including the Government’s Help to Buy scheme. This will help If you’re buying a new build home, you can put down a 5% deposit and top it up with a 20% equity loan, meaning you only borrow 75% from your mortgage lender. You won’t be charged anything on equity loan from the Government for 5 years to give you time to get your finances in order.
There’s also the Help to Buy mortgage guarantee scheme which should make it easier to get a 95% mortgage deal.

Be prepared to compromise.

If you’re itching to get on the property ladder this year, you may have to make some compromises. Could you broaden your search to include cheaper areas? Or look for 2 bed rather than 3-bed properties? Finding the middle ground could help you become a property owner much sooner and could help improve your capital growth meaning you will be on track to owning your dream property/properties (let’s not leave out the investors!) in no time.

Consider shared ownership.

Can’t afford to cover the costs of buying on your own? Shared ownership to get onto the property ladder may not be on everyone’s bucket list but it might be worth splitting resources with someone else. Your partner is the obvious choice, but if you’re single or not ready to co-habit then buying with a sibling or a close friend or investor can be a good option. There are an increasing number of mortgages on the market aimed at co-owners.
The other option is a housing association shared ownership scheme. You buy a share of your home (25% – 75%) and then pay rent on the remainder. You can buy more shares in your home any time afterwards.

Time it right

If you have your deposit and you’re ready to go, it’s still worth considering the timing of your purchase. It’s impossible to guess exactly how the market will shift, but keeping on top of the news can help you get a feel for when highs and lows are likely.

However, much like all the time, you’re short on budget. You don’t have sufficient to pay even the down payment. And unsurprisingly, you can’t find anyone to buy your existing home, at the right amount, in such a short time.

What do you do? Let someone else have that beautiful house in which you have already pictured yourself growing old with your other half? Or should you rob a bank?

Well, you look for a good commercial or/and residential bridging loan lender!

What is a bridging loan?

Bridging loans are temporary loans that ‘bridges’ the finance gap between you selling your existing property and buying a new one; meaning, they are to help you complete the purchase of a new property before selling your old one. It’s a short-term arrangement, ranging usually from 2 weeks to 15 months, which aims to meet your immediate liquidity requirement.

These loans are provided with comparatively higher interest rate; still, they come with a host of benefits that make them a popular and practical solution in the real estate sector over other avenues like a traditional home loan, Home Equity Line of Credit, and more.

When might you need it?

Like mentioned, these loans are designed to meet your immediate finance requirement to buy a new commercial or residential property. There are plenty of scenarios when you might need or want them.

• When you’re not too rich to own multiple properties at the same time.
• You bought a house at an auction and now need money right away for down payment.
• You got a job promotion that needs relocating; you need to buy a home in another city.
• When you’re planning to build a real estate portfolio depending on your cash inflow or future financial standing.
• When you realize the procedure and formalities of a traditional financial institution to acquire a home loan are too long and tedious (a major problem in the UK).
• When you simply and immediately want to buy that property that mirrors your dream house.

Bridging loan vs. Home Equity Loan

One of the close alternatives to Bridge loan is home equity loan (not to be confused with HELOC- Home Equity Line of Credit). It is borrowing cash against the amount of your home’s value. Some people prefer it over the bridging loan; but there is a string of factors that you must consider, aside from your individual needs.

A traditional home equity loan can take quite some time for the approval. It needs you to have a clean credit history. Also, comparatively, it can include paperwork in heaps. So, sure it can be a tad cheaper than bridging loans, it does not, however, qualify well to meet your immediate liquidity requirement.

Two types of bridging loan

Broadly put, there are two type of bridging loan-

• Open bridging loan- When the repayment date and method is undetermined.
• Closed bridging loan- When the repayment date and method is fixed from the get go.

Of course, they can further categorize according to their purposes – residential, commercial, land for a farm and so forth – and as the lender deems fit.

How to find a good bridging loan lender?

Now that you have made your mind to go with the bridging loan, it is essential that you spend sufficient amount of time in picking the right lender. Why?

• A good lender would charge a very competitive interest rate.
• Procuration fee would be quite less.
• The whole process would be smooth and quick.
• There would be fewer paperwork formalities and regulatory obligations.
• You should also expect legal help.
• For additional property buying and selling assistance.

There are many factors that you must consider when picking one of so many bridging loan lenders. Here are 5 winning ways though to make the selection process quick and easy-

1. Don’t solely rely on the Internet

The Internet is a great source of information. But believing everything mentioned there is absurd. Just because a lending company, on its website, says that it is “the best” doesn’t necessarily means that it’s true and that people should believe that. Today, even a newbies can frame themselves the “most experienced” bridging loan lender easily.

So keep your eyes open and mind clearer when browsing around the internet. Don’t blindly believe everything mentioned there. In fact, don’t solely rely on the internet. Go old school; contact real life people, visit them in person. Talk to them; know about their experience with respective lenders, if the whole process was quick and easy, the difficulties they faced and more. Be respectful though; don’t bother them too much.

2. Look at their range of services

Many people believe that a company offering a wide spectrum of services is good. But there’s also another set that says companies with more focused servicing approach reflects their expertise, which in turns do well for the clients/customers. Who do you believe? Well, in this case, keep your personal needs and requirements upfront – the loan amount you want, if you have a bad credit history (which could mean a tad bit more paperwork), if you’re buying a commercial or residential property, the repayment method, duration and so forth – and then match these to the services offered by the lenders.

Also, consider if you’re going to require legal assistance, or buying and selling advice. Even when you think you have it all figured it out, it is a good idea to have professionals by your side, given the money involved here is too large to make even minor mistakes.

3. Make the interview fruitful

Don’t make your meeting with potential lenders a ‘yes or no’ session. Make it fruitful and rewarding for yourself. Don’t just listen to them—they know their things and could be very convincing. Learn to ask questions, and NOT just the basic questions. From checking their background to resolving all your technical queries—range your questions, be specific, and talk about things even when it sounds silly. As a professional, they are required to resolve all your issues even when it’s uneasy or annoying.

Here are 5 simple questions to help you keep the conversation going with the potential bridging loan lenders-

1. What fees do you have to pay?
2. Are there any late payment penalties?
3. Can they give you some references of their past clients?
4. What’s the exact time period you will have your loan with you?
5. With your credit history and current financial standing, can there be any legal difficulties?

4. Do your own research on everything

You have heard all that the bridging loan lenders had to say. Now instead of just nodding your heads to it in consent, it’s now time to cross-check. After interviewing so many, it won’t be difficult to do a thorough and concluding research. See the kind of services they are offering, their fees, their expertise, and experience level and so forth.

Also, focus on who was friendlier—who was more client driven or who went that extra mile to ensure your questions were answered to your full satisfaction; see who you were most compatible with, who understood you and your personal needs adequately. Look into all these aspects and narrow down your list to just the best lenders.

5. Be realistic on your financial standing

Even when you think you’re in great financial standing, things could go wrong (something that Brexit recently taught us well). So don’t exaggerate or undermine things here; be very realistic on the money end. Be certain if you can pay the interest rate without blanking out your bank account. Know about your future source of income and if it’s consistent or not; if you’re going to get the required amount on selling the existing house or not, how you’re going to get paid, if that buyer is reliable or not and so forth.

There are a lot of things to stress about and a great deal of things to be realistic of. So be practical on your financial standing and expectations.

Bonus

6. Don’t over-think

Even after reading all the tips and “tricks”, sadly, things could go wrong and you can end up with a wrong bridge loan lender and a lot of financial mess. So do be thoughtful, but don’t over-think; it’s never helpful. So go with your guts. Trust your judgment and your lender.  Things will turn just fine.

Like mentioned, there’s a plethora of aspects that you must consider when picking a good bridging loan lender; it depends on your own personal needs, requirements, market trends and more. But the mentioned ones are the important factors that should be prioritized atop.

Still confused? Lost in whats, whys and hows?

Pick a good finance property company and get all your queries resolved before making any commitment.

Types of Bridging Loan:

Commercial Bridge Loan:

A commercial loan is used for different types of commercial needs. The company may require urgent cash to acquire new property for company expansion. A commercial loan can be used as long as the need is pertaining to a commercial property and minimum 1 commercial property is available as security.

Residential Bridge Loan:

Residential bridge loans are paid back through high street lenders mortgage or when the residential property is sold at a higher price.

Fixed and Variable loan:

The rates of bridging loans can be variable or fixed. A fixed bridging loan means fixed rate of interest all over the term. Every month instalment will be the same.
A variable bridging loan means the rate of interest may change. The instalment amount will go up and down.

First charge and second charge loan:

In a first charge bridging loan, the bank will take the first charge over the property above all others. This is typically done when a purchase has been made.
In second charge loan, the bank will take a second charge behind the existing first charge lender. Many people get confused between second charge loan and secured loan. Second charge loans are for a very short period of time, usually for 12 months.

Open Bridge Loans & Close Bridge Loans:

Open bridge loans are for when you are waiting for your property to sell, but you wish to purchase a new property. Open bridge loans can be used before the contracts have been exchanged for selling your property. So, open bridge loans are risky for the lender as the repayment date is not fixed. With no fixed repayment date, the bank can only make guesses as for when they will get back their money.
Close bridge loans are similar to open bridge loans and are most commonly used when you buy property. The only difference between these two loans is that close bridge loans can be used only when the exchange of agreements for the sale of property takes place

Getting Residential Bridging Loan:

At Ralph Property Finance, the procedure of obtaining a residential bridge loan is similar to the procedure of getting a normal home loan. The documentation required and overall eligibility criteria are also the same.
The residential bridging loans are offered by the Ralph Property Finance to the clients only when the client has entered into an agreement formally for the sale of his or her property. If in case, there is no formal agreement about selling the current property, then Ralph Property Finance normally gives a window of six months to one year window to sell the property and pay the loan back. The maximum term of the residential bridging loan is about two years. So, on the whole, the fact is that the home bridge loans are offered to the customer for some time to dispose of their old property while offering them a loan to instantly acquire their new house. If in case the client is not able to sell his or her property in the given period of time, then the Ralph Property Finance offers the client to convert his bridge home loan into a simple mortgage loan. The old property of the client will be kept as a mortgage and the bridge loan will be converted into a normal home loan with a high rate of interest

Eligibility Criteria for Residential Bridge Loan:

Residential Bridging Loans are given to the clients who are at least 21 years old and are legally the owner of the current property. The client gets the loan either equivalent to the value of the current property or 80% of the cost of the new property that is to be obtained. The history of other credit, assets and liabilities are other things that are used for reaching the final amount of the residential bridge loan agreement.
We will examine your documents of income, bank statements and history of your credit in a normal way as they examine a home loan application. You will have to submit the legal documents of both the property for the verification. Our expert team will check if the property is free from any legal liability or not. They will also go for a technical verification of both the properties to assess its value. The official documents of the current property have to be mortgaged with the Ralph Property Finance until you repay the bank loan. You can repay a residential bridging loan by asking the buyer of your current property to give you a payment check in favour of Ralph Property Finance.

Repayment alternative for Residential Bridge Loans:

The residential bridge loans are paid back by paying equated monthly instalments or by paying interest on the amount of loan till the time the property is sold off. On selling the property, the client has to pay back the whole amount in a fixed 2-year window.

If you are residing in Manchester and are thinking to obtain a residential bridging loan you must surely visit Ralph Finance Property.

Ralph Property Finance is a one stop destination for all your financial needs. We specialise in offering short term residential and commercial loans. Ralph Property Finance looks into all proposals and assess them on their own merit. So if you are looking to sell your house or are trying to buy a new one then our residential bridging loans are a fantastic option for you.
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]]> http://www.ralphpropertyfinance.co.uk/how-to-get-residential-bridging-loan/feed/ 0 http://www.ralphpropertyfinance.co.uk/ftb-activity-in-london-up-6-year-on-year/ http://www.ralphpropertyfinance.co.uk/ftb-activity-in-london-up-6-year-on-year/#comments Sun, 07 Dec 2014 20:57:43 +0000 http://ralphpropertyfinance.thegenesisgroup.uk/?p=388 The latest data from CML regarding the traits of lending in the capital during Q3 2014 has shown that the market grew in both house purchase and remortgage activity compared to Q2.

First-time buyer loans totalled 13,300 in the third quarter in London – 8% up on the previous quarter, and 6% up on Q3 2013. First-time buyers in the period borrowed £3.3 billion – up 11% on the previous quarter and 16% on Q3 2013.

There were 10,600 home-mover loans in the third quarter, up 16% on the previous quarter but 1% down on Q3 2013. Total value of these loans was £3.7 billion, up 18% on the second quarter and 10% on the third quarter 2013.

Remortgage lending in the quarter showed growth in London compared to the previous quarter but down in volume slightly compared to the third quarter last year.

Lending for home-owner house purchase

There were more loans and a higher amount borrowed in Greater London in this quarter than in any quarter since 2007. House purchase lending to home-buyers increased quarter-on-quarter in London totalling 23,900 loans, up 12% compared to the second quarter and the value of these loans totalled £7.1 billion, a rise of 15% on the second quarter. Compared to the third quarter of 2013, the number of loans increased 3% and value of these loans increased by 13%. This is the highest quarterly volume in London since the fourth quarter 2007, and the highest amount borrowed since the third quarter of 2007.

Lending to first-time buyers

First-time buyers took out more loans and borrowed more in total than in any quarter since 2007 totalling 13,300 loans and £3.3bn. The affordability levels slightly improved with first-time buyers typically borrowed 3.86 times their gross income, less than the 3.90 in the previous quarter but above the UK average of 3.41.

The typical loan size for first-time buyers was £221,997 in the third quarter, up from £212,500 in the previous quarter. The typical gross income of a first-time buyer household was £58,000 compared to £55,255 in the second quarter.

First-time buyers in London have tended to put down larger deposits than in the UK – typically putting down a deposit worth 24% of the property value compared to the UK average of 17%. In the third quarter, first-time buyers paid 21% of gross monthly income towards capital and interest payments, a minor change from the second quarter when it was 21.1%.

Global Equities at a record high

Global Equities rose to a record monthly high in October providing returns, as measured by the MSCI World Total Returns Index, of 12.8% in the past year – the second highest in this review. Although global economic activity has been moderate, the distribution of that growth has been uneven; with a quickening pace in the US and UK, slowdown in the Eurozone and little change in China. The European Central Bank’s further cut to its interest rates and intended purchases of asset-backed securities to stimulate the Eurozone economy are likely to have supported Global Equities.

Returns on all asset classes up by 4%

The average annual return for the nine key asset classes has edged down from 4.6% in October 2013 to 3.9% in October 2014. While returns for several asset classes have increased in the past year there have been declines in returns earned on Precious Metals and Commodities.

After Commercial Property and Global Equities, the largest returns were in UK Residential Property (11.3%), UK Bonds (6.7%) and International Bonds (5.5%).

At the other end of the spectrum, investor returns fell in Precious Metals (-17.8%) and Commodities (-4.9%).

Residential Properties show strong growth

Over the past year, total returns (based on house price growth and rents) from UK Residential Properties grew by 11.3%. This was driven by average housing values rising by 7.6% and returns on private rents growing by 3% between October 2013 and October 2014.

Taken from the start of the recession in 2008, the report found that by 2040:

-People who rent will be more than twice as likely to be living in poverty than homeowners.
-Private rents are forecast to rise by 90%, twice as fast as incomes.
-The average private rent today is £132 per week – it will be £250 per week in 2040 in real terms.
-1 in 5 (10.6 million people) will be living in private rented homes, up from 7.2 million today. Half of these, 5.7 million, will be in poverty (a rise of 2.6 million).
-1 in 10 will be living in social housing, down from the current figure of 8.2 million to 5.7 million in 2040. Social rents will increase 39% to reach £92.10 per week in real terms.
-If social rents continue to rise towards market rates, the cost of Housing Benefit could rise by 125 per cent – adding £20 billion to the current bill.
-Real median house prices for owners will increase to £263,000, a rise of 57 per cent. 35.3 million people will be home owners by 2040 (a reduction of 820,000 people from 2008). -Real household incomes will grow from £32,300 to £45,500.

In light of today’s figures, JRF has called on the Government and housing providers to work together on an action plan to solve the housing crisis and keep poverty in check. Poverty levels are likely to reach one in four by 2040 and can be contained if:

-Housing supply doubles to more than 200,000 units a year;
-Social rents continue to go up by inflation plus 1%, rather than move towards market rents;
-Housing benefit continues to support housing costs at similar levels;
-The fall in the proportion of affordable social housing in the overall market is halted.

Julia Unwin, chief executive at JRF, said: “These stark findings are a wake-up call for political leaders. After decades of failing to build enough, those in power have a responsibility to act now to build more genuinely affordable homes. Without that we are storing up trouble for the future – a price that will be paid by children starting school life this year. These high costs are bad for families, the economy and Government.

We need a clear strategy that builds the homes we need in the right places and avoids locking low income households out of affordable homes. This is about more than frustrated aspirations of home ownership from Generation Rent: the reality facing many people is a life below the poverty line because of the extortionate cost of keeping a roof over your head. Addressing the rising cost of housing is crucial to tackling the high levels of poverty in the UK.”

David Orr, chief executive of the National Housing Federation, said: “Our country is in the depths of a housing crisis so severe that unless we do something about it we won’t be able to house the next generation. This isn’t just about house prices. The cost of renting is getting out of control, leaving many people in poverty. If this continues we will see people priced out of both buying and renting and struggling to put a roof over their head.

With 8 million babies born between 2001 and 2012, we really need to ask ourselves where will our children live when they reach adulthood? For decades we have failed to build enough new homes and are currently only building half of the new homes we need every year. We must build the right homes in the right places at a price people can afford.

We can’t let the stark predictions in this report to become reality. We are calling on the next Government to commit to end the housing crisis within a generation and to publishing a long term plan within a year of taking office detailing how they will do this.”