The Benefits to Using Bridging Loans in the UK

In the latest series of our bridging loans articles (previously we’ve discussed mortgages and an overview), we want to focus on the UK market. Most people do not know what the real meaning of a bridging loan as this kind of financial product isn’t actually widely offered in the UK and as such doesn’t really have much of a public profile. Hopefully this guide will put it all into perspective for you.

The Basics of Bridging Loans and Finance

A bridging loan lends money to a person or company who is borrowing it to meet his or her financial requirement – typically for property purchases over a short period of time where capital is needed quickly and the time frames involved with a high street standard lender might take too long to complete.

A bridging loan will be agreed over a short contract can be useful for over short term financial crises too as it is typically highly flexible and has no specific conditions that require the borrower to fulfill other than interest rates and repayments. These loans can be applied for by anyone residing in the United Kingdom and banking institutions or lenders usually offers these loans with a caveat of swift repayment terms and higher interest rates (visit the Bank of England to see the latest rates that could effect your application).

UK Interest Rates

Thanfully Bank of England Interest Rates have been falling which make the strategy more affordable for both individuals and companies.

Commercial Bridging Loans

There are various types of bridging loans available – for example there is a niche involving commercial bridging loans (also known as hard money loans in the United States: Source Investopedia). Business owners can remedy a gap or shortfall in their businesses with such agreements.

The Benefits of Bridging Finance

  • A bridging loans will help the borrower to face the financial needs until he secures a permanent loan with a more traditional agreement – e.g. from a UK high street lender (think Lloyds, HSBC, NatWest, RBS, Barclays etc).
  • Home owners can gain control over their financial situation until they buy or sell their homes.
  • Some people even make use of such a loan option to purchase some commercial properties such as hotels, retail business and industrial properties, refinance their property and to deal in real estate.

Generally while dealing with a commercial property the person would need a long term loan to sign the deal and with this loan package.

Should You Take One Out?

Decisions Decisions

Make sure you make the right decisions by asking the right questions.

Well, as with any financial product that’s entirely up to you. What we would say is that don’t jump into it. Make sure you examine the interest rates, the repayment schedule, as well as what penalties you could incur for late payments, or extending the loan period out. Here some additional thoughts that we think you should consider.

Can be closed within a short time

Bridging loans are designed to close much quickly than other loan types. This makes it a good option when a person needs fast cash to finish off the deal of a commercial property or other deals of businesses. This advantage offers the buyer to close the deal at a quicker pace based on their financial condition. Both the individuals and firms avail these loans as it eradicates the need to file for bankruptcy.

Easy and quick availability

When a person is searching for bridging loan providers they will find many companies offering such loans with fast approval processes. You can even get these loans approved within a period of 48 hours. Even if other conventional lending firms have rejected loan applications, these loans offer a helping hand to them while in need. Though the companies with check the financial situation of the borrower, there won’t be any credit check footprints left due to searches for approval being completed using what is called a “soft search”.  In the United Kingdom there are some well-established firms and brokers that follow this practice (click here for an example UK bridging loan broker where you can see how the lay out terms, conditions, and caveats).

Easy repayment option but perhaps higher interest rates

Bridging loans in the UK offer easy repayment options with sometimes higher interest rates which aren’t always a massive issue due to the borrower repaying so quickly anyway – especially if the borrower pays up on time. The dates of repayment of the installments can be discussed between the borrower and the banker to make it easier to repay each month.

Our Conclusion on UK Bridge Loans

Bridging loans can be a perfect solution if you need quick finance for a large property deal, and can’t wait for your traditional lender to agree on, and finance the situation. However, if you do decide to go ahead, you must make sure that you continue with a standard loan application, and once that comes in and is approved, pay the bridging loan of in full so you don’t incur large interest rates and penalties.

PS: We forgot to mention when we originally published this advice that check to see that any lender is registered with the Financial Ombudsman and doesn’t have any filed complaints on record.

How to Choose a Reputable IT Support Company for Your Finance Business

IT Support Company

Choosing the right IT Support for your business.

With the recent economic down-turn being felt globally, many small businesses have had to make drastic cost cuts in order to react to the recession. One very popular and effective way in which many SMEs have done this is by cutting internal IT resources and switching over to using an external and outsourced IT Support Company. The benefits mean that a business no longer has to employ on-site staff, deal with overheads associated to that such as HR, pensions, and office rent, as everything is managed by an external company.

A lot of competition has sprung up as a result for companies fighting to become the chosen IT Support Company for businesses making cut-backs – this means there are a lot of IT companies to choose from, so how do you go about making sure you choose a good one, and a reputable one? Here are a few tips that I recommend having worked in the business for many years.

Make Sure the Company is Local

It’s easy to reduce costs even further by selecting an off-shore partner for IT Support, by my experience is that this is rarely worth the money. You need a company that can come into your office at short-notice and fix any IT problems you have. Sometimes it’s not possible to have proper IT support just over the telephone and email. Having a local company that speaks the same language as you and has the same culture as your business is far better in the long-run.  Personally, as someone living in London I recommend IT Support London – they are very good and offer reliable services at a cheap price and are managed by a friend of mine.

Ask for Customer References

Don’t get suckered into using a new IT Support Company that has no history of delivering good service, or even worse, getting into a contractual agreement with a company that has a terrible reputation. During the pitch process ask the IT Company for references from existing clients, and at the very least do a look-up on them over the Web. See what other people are saying about them.

Ask to See Their Qualifications

Any IT Support Company worth their salt will have the latest and very best qualifications. Whether that’s the Microsoft accreditations ranging through to customer service exams, all are vitally important to ensure that they are reputable, know what they are doing, and are qualified to do the job for you. If they cannot show you qualifications then make sure that you walk away… quick!

Enter into a Trial Agreement at First

When you sign on the dotted line make sure that the initial contract is a short-term one of around three months. This way you can easily escape the relationship if you find that they are not the IT Support Company to suit you and your business. This might be more expensive at the beginning but could save you a bucket-load of cash in the future if you make any mistakes.

Of course, by following these guidelines there is no guarantee that you will end up choosing the best IT Support Company – but at least it should give you some good groundings and lay the framework for choosing a reputable supplier of IT Support Services to help manages your computers, PCs, Macs, Services, and Networks.

What is a Bridging Loan? Our Guide to This Type of Loan

Previously we put together a guide explaining what a bridging mortgage is.  This week we are explaining the broader term of briding loans.

Simply defined, a bridging loan is a loan intended for use during breaks or gaps between a debt that will soon be due. Bridging loans are considered short-term loans because they are designed for funding in between a debt and incoming credit or financial income. In other words, the loan is considered a “bridge” between debt and upcoming income.

Bridging loans are often more expensive than ordinary loans, including other short-term loans, because they are typically considered more of an “emergency” or necessary measure. Naturally, this means that the interest rates, penalty fees and other fees associated with bridging loans are raised when compared to the rates and fees applied to non-‘emergency’ loans.

What Are Bridging Loans For?

There are several different types and usages of bridging loans. However, they are most often used—and, in fact, were originally designed for—for buying property. For example: If you are selling your old house in order to buy a new house, you may find that there is a gap in between receiving money for your old house and needing money to buy or put a down payment on your new house. A bridging loan will supply you with the necessary money to secure your old house while you wait for the money from the sale of your old home.

In addition to this primary function, more and more people are using bridging loans for non-property purchases and measures. An increasing number of people are using bridging loans as alternative short-term loans; some people are even using them for non-necessary measures, such as paying for vacations or holiday trips, weddings, auction items and other purchases where they would like to have cash flow immediately with the intention of paying it back after the short gap or break.

Are Bridging Loans Worth It?

Bridging loans can be a risk if you are not careful to deal with professional, legitimate bridging loan lenders. A professional company will make sure that you are aware of all the potential fees, fines and interest rates associated with the loan that you are taking out. Many bridging loans have interest rates as high as 18% per year—meaning that you do need to be sure that you can pay back the loan within the required timeframe, unless you are willing to pay very high interest rates in addition to the potential for other late fees and fines.

Video Explaining Interest Rates:

In general, it is recommended that you only use bridging loans for purchases or transactions that are necessary for your residence or your business. Non-essentials, like vacations or auctions for collector’s items, are not important enough to your well-being and financial success to use this type of short-term loan with higher interest rates.

If you are intending on using a bridging loan, be sure that your upcoming income is secure and that you are well prepared to pay back the loan within the appropriate amount of time.

What is a Bridging Mortgage and How Do They Work?

Most people don’t know about bridge loans or bridge mortgages as they are a financial product that hasn’t had much exposure in the mainstream press. Today we thought that we would give a quick overview of what a bridging loan is and how they work, in particular when it comes to gaining rapid access for a loan for mortgage purposes.

Confusion over Bridging LoansEssentially all a bridge loan is, is a kind of way of financing a loan, but for the short-term where funds are needed very quickly.  What this means when it comes to mortgages, is that a borrower can get access to a short-term loan which might not be possible via traditional lender methods such as banks and mortgage lenders.  A bridge loan can be very beneficial for this kind of borrower, as it lets them get money quickly before a negative financial situation occurs.  As an example, they can help a property buyer to receive loan for a specific period of time.

It’s a short term loan; usually the period of load is up to 1 year. A bridge loan can be used for many different purposes, although the most common types of bridge loans are mortgage bridge loans to generate operating capital – these are the ones that most people will use bridging finance for.

Bridging loans have helped many people to purchase property in the United Kingdom without the need to sell their existing home during periods of financial uncertainty.  A bridge loan is also sometimes referred to as a swing loan, as they are taken for a small period of time. It is become a useful way for some people to manage their debt better and more efficiently.

Usually bridge loans are used for property deals and mortgages to help prevent bankruptcy or repossession cases.  It’s often used to move a business forward and mitigate delays; as an example, a hard-money loan is mostly taken when borrowers need to get money quickly – for example in emergencies – typically so that they can re-mortgage or re-finance a property or business that might be failing. The period of time is different; you can take loan up to 3 weeks or up to 3 years.

Why Are They Called Bridging Loans?

Because they provide a loan for a specific period of time, you should ensure that you are in a position to repay the loan back in the required time period which is given to you. As we said, a bridge loan has a short duration which depends on several situations. Whenever you apply for a big loan then there will always be several conditions, for example a lender won’t lend you if your income is lower than your money request.

One very highly recommended supplier of bridge loans in the United States are iBank.com.  For our American readers, you can register yourself on the iBank.com website and then choose from a variety of different competing lenders – then choose the best lenders to suit you for a bridge loan. 

How Do They Work?

For example, a business has been approved for a $50,000 loan from a bank, However, the bank will not release those funds for another six months, and six month is the duration of time which given by bank to back their loan in given time. After loan from bank, the business should apply for bridge loan of $20,000 to cover their expenses until the $50,000 loan comes back. In bridge loan, you and your lender will face several problems. There is a great chances driving down the value of property. You should sell your property to pay off your bridge loan.

A bridge loan cost is naturally higher then any other financial loan, and they will charge specific percentages which will add on your loan. That’s what you need to be very aware, so make sure that you read the small print before signing any loan agreements.