Tag: Bridging loan exit

How has the Coronavirus affected bridging finance?

12th June 2020 / admin / Comments Off

Surveyors are being extremely cautious

Even where a valuation can be done, surveyors are being very cautious. Whilst they will be producing the usual figures for an open market valuation, 30 day, 90 day and 180 day sale, they may also add a revised figure to allow for the likelihood that prices will fall after the pandemic is over. Some surveyors have even taken to writing, ‘this valuation cannot be relied upon’, on their reports. This makes the report worthless to many bridging lenders, who aren’t prepared to lend on the basis of this type of valuation.

Social distancing causing problems with witnessing legal documents

There are currently problems with getting legal documents witnessed by a solicitor as most are now working from home and not seeing clients face to face.

Staffing shortages are affecting lenders too

Lenders have also been impacted by the requirement for staff to work from home wherever possible and have had to set up systems to allow staff to work remotely.

Staffing numbers have been hit by those needing to self-isolate, which has affected lenders’ abilities to deal with new cases.

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.

4 signs it’s time to replace your tractor

5th January 2020 / admin / Comments Off

Is your tractor holding your farm business back? Here are four signs it’s time to replace your tractor.

Whilst a new tractor may be a big expense, using outdated machinery can seriously impact your farm business’ profitability, so it’s important to know the signs that may indicate that it’s the right time to bite the bullet and invest in a new tractor.

Your business is growing or changing

As your business grows and evolves so will its requirements, and you may find that your existing tractor’s capabilities no longer cut it. If you now have more crops than you used to, you may require a tractor with a higher capacity to get the job done more efficiently and save time and money. Equally, if you have diversified into farming a new crop, you may find that you require a new tractor with different capabilities.

You’ve used it for 12,000 hours

Check how many hours you’ve racked up on your trusty tractor. It is generally agreed that standard-sized tractors have around 12,000 hours of use in them, whilst compact tractors have considerably less. If your tractor has done over 12,000 hours, it could be reaching the end of its lifespan.

It keeps needing repairs

If your tractor keeps breaking down or needing maintenance, this could also be a sign that it has reached the end of its lifespan. Rather than shelling out regularly to have it repaired, it may be more cost-effective to simply invest in a new machine.

It uses old technology

If your tractor uses outdated technology, it could be holding your business back from reaching its full potential. New agritech is being developed at a rapid pace and tractors are constantly being made smarter and more efficient. Investing in a tractor that uses modern technology could help to boost your business’ productivity and profitability.

If you require help or advice with financing a new tractor, speak to our team here at Richmond Asset Finance. We provide a range of flexible agricultural finance services to help you to grow your business. To discuss your requirements in more detail, give our team a call on 0113 288 3277.

What is a bridging loan exit strategy?

28th June 2019 / admin / Comments Off

When taking out a bridging loan you will be required to provide details of your exit strategy, the method by which you will pay back the loan.

Bridging loans are an extremely valuable form of short-term finance that can help businesses to quickly acquire money to cover an expense before credit becomes available to them.

Just some of the reasons that businesses use bridging loans include funding unexpected expenses, paying urgent debts, and investing in time-sensitive business opportunities.

Before rushing in and requesting a bridging loan though it’s very important that you create a plan for paying back the money. This is called your exit strategy.

The price of a poor exit strategy

When you take out a bridging loan you will agree a date by which the debt will be repaid. If you cannot repay the amount by this time you will need to consult with your loan provider about what happens next.

In some instances, it may be possible to extend the loan, but beware that this is not always the case. A late repayment could end up costing you a considerable amount in renewal costs or late payment penalties, as well as having a negative effect on your credit rating, so it’s wise to ensure that you have a reliable exit strategy in place before going ahead.

Typical exit strategies

Your exit strategy will depend entirely on your business’ unique circumstances and the reason that you required the bridging loan.

A few examples of typical exit strategies include:

Selling a property or land
Selling debt to a collection agency
Selling shares or assets
Inheritance
Refinancing

For further information about bridging loans,or help and advice with creating a sound exit strategy, get in touch with our team of experts here at Richmond Asset Finance by calling us on 0113 288 3277.