Month: May 2020

Bridging Loans when selling a house – what are the pros and cons?

Pros

You can buy your new property right away: You don’t have to wait to get a loan.
It gives you time to get a better price on your property: You can avoid the stress of having to sell your property quickly. By taking the time, you may be able to get a better price for your property.
Interest-only repayments which are capitalised on your peak debt: Your bridging loan repayments are usually ‘frozen’ during the bridging term until you sell your existing home. You’ll only have to keep paying your current mortgage and not have to worry about managing two home loans.
Banks charge standard interest rates: In the past, banks charged a higher interest rate for bridging loans but now there are some lenders that charge standard variable interest rates.
The same fees and charges as a standard home loan: Application fees are the same and you don’t have to worry about break costs or discharge fees for paying the loan off quickly. Keep in mind that most lenders won’t generally approve a bridging loan if you’re likely to sell the property in less than 3 months.
You can make unlimited P&I repayments: To reduce your interest bill, you can actually choose to make as many repayments on the bridging loan until you sell your property.
Avoid the costs of renting and moving twice: Sometimes renting and having to pay for the costs of moving twice may be a better option than getting a bridging loan. It’s important to speak to a qualified mortgage broker so they can help you do the sums to find out which option is better for your situation.

Cons

Interest is compounded monthly: Although the interest is capitalised on top of the peak debt, the longer it takes to sell your property, the more your loan will accrue interest. Interest is compounded on a monthly basis.
You need to pay for two valuations: This will be a valuation of both your existing property and the new purchase.
Higher interest rate if you don’t sell the property in time: If you don’t sell your existing home within the bridging period, a lot of lenders will charge a higher interest rate. Many will also require you to start making principal and interest repayments on the peak debt in order to service both loans. This can cause financial stress.
No redraw facility: If you choose to make repayments during the bridging term but need to redraw for any reason, you won’t be able to do so.
Normal early termination fees will apply if switching lenders: If your current lender doesn’t offer a bridging loan product, you’ll have to go with another lender that will likely insist on taking on the entire debt (your existing mortgage plus the bridging loan). Because you’re switching lenders, you may be liable for early termination fees and break costs particularly if you’re switching during a fixed interest period.

Bridging Loans: Explained

14th May 2020 / admin / Comments Off

Selling your home and buying a new property at the same time can be a little tricky.

It can sometimes take a while to sell your home, leaving you without the sales proceeds to buy your new property.

With a bridging loan, you can avoid the stress of matching up settlement dates, move quickly to buy your new home and give yourself more time to sell your existing property.

A stort-term bridging finance is also known as ‘relocation loan’.

Bridging loans explained: How does it work?

A bridging loan is basically finance that allows you to buy a new property without having to sell your existing property first.

Banks work out the size of the loan by adding the value of your new home to your existing mortgage then subtracting the likely sale price of your existing home.

What you’re left with is your “ongoing balance” or “end debt” which represents the principal of your bridging loan. Banks will assess your ability to make mortgage repayments on this end debt.

Lenders use both properties as security and you’ll have one loan (peak debt) to cover both the existing debt and the new purchase.

Between when your bridging loan is advanced until you sell your existing home, most lenders capitalise interest-only repayments on the peak debt which means that you’ll only have to worry about continuing to make principal and interest (P&I) on your current mortgage, rather than trying to manage repayments on two home loans.

After your property is sold, you simply continue to make normal home loan repayments, plus the compounded bridge loan interest, on the new loan.

Small businesses boosted by bounce back loans

12th May 2020 / admin / Comments Off

The government have announced its intention to offer bounce back loans to small businesses. The key terms of these loans are:

businesses will be able to borrow between £2,000 and £50,000 and access the cash within days.
loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form.

Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.

Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting 4 million jobs through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.

The government, which has been consulting extensively with business representatives about the design of the new scheme, will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.

The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days- providing immediate support to those that need it as easily as possible.

‘Whole new business’

7th May 2020 / admin / Comments Off

Farmers innovate to get food from field to plate during the coronavirus pandemic. A report from Reuters has explained the struggles that farmers currently face.

New recruits for seasonal work

Finding seasonal workers is a priority in Europe, where spring harvests are at risk because the usual vast armies of migrant labourers cannot leave home as all of the boarders are currently closed.

Spain, the European Union’s biggest fruit and vegetable exporter, has responded by allowing the unemployed to take farm jobs while keeping welfare payments, and has extended work permits for those migrants already in the country.

France has mobilised 15,000 French workers idled by the crisis so far to help offset a potential shortfall of 200,000 foreign labourers this spring.

It has been suggested that farmers were frustrated that the new recruits lacked skills or had quickly quit.

Poland, meanwhile, is struggling without Ukrainian seasonal labourers and the Russian Agriculture Ministry said prisoners might help out on farms in the absence of Central Asian workers.

Germany, Britain and Ireland are allowing companies to bring in trained workers from Romania and other European Union states on charter flights with quarantine measures.

U.S. President Donald Trump has exempted such migrants from a temporary curb on immigration during the crisis.

Elsewhere, Nigeria’s federal government is making identity cards so farm workers can move freely during a national lockdown after many were stopped by police.

Iraq’s Agriculture Ministry said farm workers were exempted from curfew measures and farmers were allowed to move harvesting machinery around the country.

To keep transport links running smoothly, Brazilian toll-road operator CCR SA has distributed more than 1,000 food and hygiene kits a day to truck drivers as service outlets are closed.

In Kenya, Rubi Ranch has been sending avocados to Europe by ship due to limited air freight capacity, as airlines have grounded aircraft and cut off the company’s usual supply route.