Bridging Loans Explained

07 May 2021

Bridging loans have become popular among borrowers for all the right reasons. With everyone talking about bridging loans, including the mainstream media, the chances are that you have already heard of these loans before.

This is especially true if you are trying to move houses. However, several people do not know what a bridging loan is and how it works.

Taking a bridging loan could be the best thing to do if you have found a dream house you want to acquire before someone else buys it, and you are yet to find a buyer for your existing home, which still has a mortgage.

A bridging loan will give you the funds you need to buy the second house as you wait to sell the current one. Even so, there is so much more to bridging loans than you might imagine.

In this guide, we will discuss everything about bridging loans from the basics, pros, and cons. keep reading to discover everything you need to know about bridging loans.

Contents

1 So what exactly is a Bridging Loan?
2 What are the Pros and Cons of a Bridging Loan?
3 The Benefits of a Bridging Loan:
4 Considerations of a Bridging Loan:
5 Choosing the Best Bridging Loans for Your Needs:
- - 5.0.1 Read Also:

So what exactly is a Bridging Loan?

Simply put, a bridging loan is a short-term loan taken on top of the current home loan. As the name suggests, a bridging loan is usually taken when you need to buy a new house immediately before selling your existing home. When you take this loan, you will be paying interest on two loans.

To put things into perspective, bridging loans are a form of interest-only loans.

The value of your existing property will determine the value of the loan. It is also vital to note that these loans have limited terms and contain special concerns. Depending on the lender, the amount and terms of the loan will vary. You can view this bridging loan calculator first before you apply for the loan to get a glimpse of your financial responsibilities.

The structure of bridging loans differs from one private money lender to another. Some private lending providers will require you to continue serving your loan until you settle in your new property. The private finance providers will the interest of your two loans together during the loan duration.

Once you find a buyer for your second property, the mortgage will be discharged. You will then start paying the principal and interest of your current loan. On the other hand, other private lending providers will ask you to service both loans after taking a new one.

After the sale of your home, the initial mortgage will be discharged, while the bridging loan might be converted into the home of your choice for your new property.

When taking a bridging loan, it would help to think about compounding interest because you will be charged for both loans. Always keep in mind that you will end up paying more than you should if you fail to find a buyer for your house quickly. Bridging loan interests are calculated daily and charged monthly.

Another key element you should have in mind is the duration of the bridging loan. These loans usually last around six months to 12 months, depending on the private finance providers and your preferences. Your loan length will be six months if you buy an existing home and 12 months for a new one.

What are the Pros and Cons of a Bridging Loan?

Now that you are aware of what a bridging loan is and how it functions, it is time to look at the pros and cons. Understanding the benefits of these loans and the challenges you are likely to encounter when you take a bridge loan will help you make the right decisions. Here are the pros and cons of a bridging loan:

The Benefits of a Bridging Loan:

Bridging loans have so much to offer. It is crucial to understand what you should expect with this type of loan to get the best options. Here are the pros of bridging loans:

More Convenience:

Do you want to buy your dream home quickly? A bridging loan will allow you to do just that even if you have not sold your existing house just yet.

Flexible Repayments:

Depending on your bridging loan structure, you will only have to service your existing home loan finance when you take a bridging loan.

Avoid Further Expenses:

You will not have to rent when you take a bridging loan. It will allow you to move even if you do not have a buyer for your house.

Considerations of a Bridging Loan:

Like is the case with any other type of loan, bridging loans also have their fair share of cons. For instance, you will be forced to pay more if you fail to sell your house as soon as possible.

Choosing the Best Bridging Loans for Your Needs:

Bridging loans are categorized as open bridging loans and closed bridging loans. Closed bridging loans have a pre-determined settlement date while open bridging loans do not have an agreed settlement date.

When looking for a bridging loan, it will help to consider the duration, interest rates, and loan structure. It would also help to compare alternative loans before making the final decision.

Above all, it is essential to find the right private lending company. Fortunately, you can use an easy-to-use online platform such as ADS.finance to find the best private finance option near you.

Read Also:

Ariana Smith

I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at Content Rally.

View all posts

Where Protective Machine Covers Are Put to a Good Use

In any industry where machinery is used, it is vital that it be protected when it is not operational. That is true regardless of whether it is utilized in an indoor or outdoor setting, or of what materials the various components are made. Where there is a danger of damage from rust, dirt, oil, grime, sun, wind, or other elements, custom covers from companies like Dynatect Manufacturing must be used. That way, the businesses that use the machinery can be sure that it is staying in top shape. Here are five examples of industries where these machines covers can be used. Protective Covers for Sports In many different types of sports, protective covers are needed for machinery and equipment of various kinds. Zambonis that are used for hockey games often need to be covered when they are not in use. The same is true of the components in batting cages for Major League Baseball and the minor leagues. Pitching mounds and home plate covers protect the field from the elements, and for gymnastics, gym floor covers can be used. For MMA or boxing, there are covers for the ring, and for track and field, there are jump pit covers. Industrial Shipping and Hauling For trucks that do industrial shipping and hauling, custom covers come in handy as well. That is true for flatbed and lumber trucks, and also for vehicles used for steel hauling and landscaping. Construction tarps also fall into this category. In that area, you have concrete curing blankets, safety debris netting, building enclosure tarps, and even sandblasting containment tarps. Industrial Curtains Then there are industrial curtains of various kinds that have a variety of uses. Some of these include warehouse divider curtains, outdoor curtains composed of different materials for a multitude of purposes, and mesh or roll-up curtains. There are also wash bay curtains and airplane hanger curtains. Some of these are made of tremendously strong materials, and it takes several people working together even to lift them. Noise Control Curtains There are also curtains used by different industries, most notably construction or demolition, where the purpose is to control or contain loud noises, like drilling or blasting. These curtains and covers are sometimes portable, or sometimes they are permanently installed in locations where industrial work is being done. Fire Retardant Tarps These are tarps that are rarely specific to different industries but are more designed for their fire-smothering capabilities. They are made of vinyl or poly blends that are heavy and durable. Some of them are coated with acrylic or silicone, while others, for things like fiberglass welding, are heat-treated according to highly specialized standards.Wherever safety is a concern as well as the desire to protect expensive equipment and preserve it for as long as possible, protective machine covers have a place. The industries that use these covers understand their value, and they are more than willing to spend on custom-designed materials. They want to keep their employees safe, and they also want their machinery to have as long of working life as possible.

7 Common Construction Project Management Problems

Construction project management is a resource-intensive and complex process that involves coordinating different teams and disciplines to achieve a common goal.In addition, the construction industry is constantly evolving, so project managers must be adaptable and proactive to deliver projects successfully.However, even the most experienced and skilled construction project managers can face challenges during a project.Fortunately, construction project management software like Bridgit can help managers streamline employee management and performance.However, it's still critical to be familiar with the problems troubling the construction project management sector.Here are seven of them.7 Main Problems Construction Project Managers Face:Every construction site has unique challenges, but some problems in construction project management are more common than others.1. Undefined or poorly defined goalsEvery construction project should have specific and achievable goals to all team members. Without clear objectives, it isn't easy to measure progress and ensure that everyone is working towards the same vision.A common problem in construction project management is that goals are either undefined or poorly defined. It can lead to confusion and frustration among team members.In a recent survey, 52% of the respondents were dissatisfied with the project management maturity at their organization.It’s a wake-up call for project managers to step up their game regarding goal development. Plus, it's challenging to track progress without defined goals. As a result, the project may go over budget or take longer than expected.2. Inaccurate estimatesWhen creating a construction project budget, miscalculating the cost of materials or underestimating the time to complete a task can lead to big problems eventually.It's essential to be as accurate as possible when estimating the costs of a project. Suppose you're managing the construction of a new office building. You've estimated that the project will cost $5 million and take 18 months to complete.However, after six months, you realize that the project is only 50% complete and that the final cost will be closer to $8 million. It can cause problems for your construction project since you'll need to find additional funding to complete the project.3. Employee turnoverEmployee turnover means that workers regularly leave and are replaced on a project. It can lead to a loss in productivity as new employees need time to get up to speed.High turnover rates can also lead to a shortage of skilled labor, which can impact the quality of work. On top of that, it disrupts the flow of communication and collaboration between team members.To deal with employee turnover, construction project managers should build a strong team culture. They should also create opportunities for employee development and provide competitive compensation packages.4. Scope creepScope creep occurs when the scope of a project starts to change or expands beyond the original scope. It can be caused by several factors, such as changes in the budget, unrealistic deadlines, or a lack of clear project objectives.Scope creep can significantly impact the budget, timeline, and quality of work. Therefore, construction project managers must understand the project objectives from the start.Here are some ways to tackle scope creep:Make sure everyone involved in the project understands the objectives.Keep track of any changes made to the scope.Work with the client to get approval for scope changes.Communicate with the team regularly to ensure everyone is on the same page.5. Inadequate risk managementOSHA (Occupational Safety and Health Administration) has strict guidelines for the safety of construction workers. If these guidelines are not followed, it can result in injuries, accidents, and even fatalities.Construction project managers must identify and assess risks before they start working on a project. They should also develop a safety plan and ensure all workers are trained to stay safe.Inadequate risk management leads to the following problems:Injuries and fatalities: Workers can get injured or killed if risks are not managed properly. It can also result in legal problems and a loss of productivity.Property damage: Construction sites are often located near homes and businesses. If risks are not managed properly, they can damage the property.Loss of money: In case of an accident, construction companies must pay for medical expenses and property damage.6. Poor communicationMany construction projects are complex and require coordination between different teams. A lack of communication can result in errors.Some of these problems include:Lack of coordination: Poor communication translates to a lack of coordination. It can result in construction crews working on each other, leading to delays and errors.Delayed completion: A communication breakdown can cause a project to fall behind schedule, resulting in cost overruns and dissatisfied customers.Poor quality: If there is a lack of communication, it can be difficult to resolve issues. For instance, if a contractor does not communicate with the architect, the quality of the work may suffer.7. Lack of technologyThe absence of technology from a construction site is a concerning matter that needs immediate attention. A construction company must have the latest technology to stay competitive and efficient.Technology has transformed the construction industry in recent years. In fact, the CAGR for the project management software industry is forecasted to be up to 10.67% by 2025. It has made it easier to communicate and coordinate between different teams.However, not all construction companies have embraced technology. Some companies still use outdated methods, resulting in errors and delays.How Can Construction Managers Avoid Common Project Management Problems?The key to avoiding common project management problems is effective communication. By staying in close contact with all team members, construction managers can stay up-to-date on potential issues and prevent them before they cause significant problems.Additionally, effective communication can help keep projects on schedule and within budget.Besides communication, construction project managers must also use technology to their advantage. This way, they can keep better track of deadlines, progress reports, and costs.Finally, construction managers need to have a good handle on the budget and schedule. They should be able to anticipate potential problems and take steps to avoid them.ConclusionAs established, some common problems for construction project managers include lack of communication, ineffective budget handling, employee turnover, and unrealistic deadlines.While some of these can be out of your control, you can take steps to mitigate most of them. For example, creating a communication plan, being proactive about your budget, and being realistic about deadlines will help make your construction project more successful.Read Also:Project Management in a PRINCE2 settingHow Can BYOD Improve Your Productivity?The New Global Project PRINCE2 Management ForumCommercial Construction After COVID-19: How Developers Can Adapt

Why Invest in St Kitts Real Estate

The island country launched this program in 1984. The main idea behind the CBI was to attract funds for developing the local economy. There are several investment options that applicants can choose for obtaining citizenship, and investing some money in real estate is among them.Would you like to invest your money in property to generate some income? There are lots of options available for you and not only in your motherland. Today, you can enjoy even more benefits due to special investment programs launched in many countries. One of them is the Federation of Saint Christopher and Nevis, a beautiful island country. The comprehensive info on its program allowing obtaining citizenship by investment (CBI) is available here, and in this article, you will find out the reasons to invest your money in property on this territory. CBI Program: Investing in St Kitts Real Estate: The island country launched this program in 1984. The main idea behind the CBI was to attract funds for developing the local economy. There are several investment options that applicants can choose for obtaining citizenship, and investing some money in real estate is among them. It would be a good choice for businesses looking for favorable taxation conditions and other opportunities as well as for individuals and families who either wish to move to this country or just need to have one more passport. Getting a St Kitts and Nevis Passport:The program allows purchasing property and getting a passport within only 3-6 months. There are two main options you can avail of. One of them is purchasing real estate pre-approved by the government for $400,000 or more. It is also possible to buy shares in a development project equal to the same amount. You must not sell your property for at least 5 years.Another option you can consider is finding a business partner and investing $200,000 each in luxury resorts approved by the government. In this case, you will not be able to sell your property for seven years. Additionally, investors pay some required fees. Why Invest in St Kitts Real Estate: Investing in St Kitts real estate is a profitable business. In 2018, the number of tourists arriving in the country increased by 8.8%. More than one million people come to the island each year. The country has experienced significant growth over the last years thanks to the CBI program. The GDP per capita reached $17,500 in 2018. The economic growth is expected at 3.2% in 2020.Now, the state provides tourists with high-security standards, comfortable travel, and other benefits. The real estate industry in the Federation has been developing rapidly. One of the reasons for that was the coming of the Marriott Hotel in the market. A range of significant construction projects includes Oasis Hotel and Aman Resort. Also, the number of flights to the country has increased.The investment climate of the island is favorable. As for the prices of property, they have dropped compared to the previous year, which did not affect rental income. Moreover, the rental yield has increased to 5.11%. There are no rental income taxes for citizens and companies within the country. Why Should You Obtain St Kitts and Nevis Citizenship? While investing in property to generate some income, you can also enjoy receiving a St Kitts and Nevis passport. The following are the benefits that you will get:You can move to the island without problems in case of an unstable situation in your country; Having a passport of this country allows you to freely travel to over 120 countries, including Great Britain, Singapore, and Brazil; You will be able to take advantage of beneficial taxation.Also, it is an amazing country with a rich culture and beautiful nature. Conclusion: If you have never been to this island, you may have reasonable doubts about investing in the property of this country. However, if you are looking for interesting investment opportunities, you should consider opting for the CBI available on the island.The prices for real estate are quite low now while the rental income keeps growing. Considering the recent boom in the development and the significant interest of the tourist industry’s major players in the local property, it is likely that the prices of real estate will increase. Also, the country has a stable political situation.Therefore, it is a favorable moment to invest your money in real estate on the island. Granted that it can also give you the Federation’s passport and plenty of other benefits, the CBI looks even more attractive.Read Also:7 Tips To Purchase A Prime Real Estate Property How Do Law Firms Help Companies with Their Real Estate Issues? 5 Best Things an Experienced Real Estate Agent can do DC Metro Area Real Estate Update An Overview on Luxury Real Estate in Paris

Bridging Loans Explained

So what exactly is a Bridging Loan?

What are the Pros and Cons of a Bridging Loan?