Real Estate: What is a bridge loan and how to insure it?

The bridge loan occurs when an owner buys real estate before reselling his old. This short-term credit makes it possible to make the transition between the transactions: what are the different possible formulas? How is the repayment of the credit? What insurance must I subscribe?

What is the bridge loan?

What is the bridge loan?

It is common and logical, when an owner seeks to buy a property, he wants to resell at first the one he owns to finance the new . However, it is complicated in fact to match the sale and purchase: the real estate market is tense and some goods are sold only after long months. So it often happens to find the house of his dreams before selling the old , and sign immediately to prevent it from happening under your nose. However, this can cause some cash flow problems because you have to pay money without having received the proceeds of the sale yet.

It is in this case that the relay loan comes into play. This is a short-term credit (generally between 12 and 24 months) that allows you to finance the purchase of the new property before the sale of the old one . This allows the owner to find a buyer without selling his property because pressed by time, and not to let the house of his dreams. In concrete terms, the bridging loan allows you to own two assets at a time for a short time without having to repay two credits at the same time.

Relay loan operation

Relay loan operation

In the form the principle of the loan relay is quite simple and can be cut 4 steps:

  • You intend to buy a property before selling the old one, so you need the money immediately. The banker will advance you a portion of the amount corresponding to the selling price of your property. For example, you intend to sell your house at 200 000 €, the banker will lend between 50 and 80% of this amount . No more, in case you sell your property cheaper than expected, which is often the case.
  • With this advance you can buy your new home in peace.
  • As long as the property is not sold you repay the interest and the insurance premium of the bridge loan monthly . These interest rates generally range from 3 to 5% , excluding insurance. It is also possible to delay the payment of interest when the property is sold and to pay only the insurance premium.
  • The bridge loan is for a period of between 12 and 24 months , during which time you must sell your property. Once this is done you repay the entire credit with the proceeds of the sale. If you manage to sell your house before the deadline, for example after 6 months, then you repay the bridge loan directly.

And if the amount of the bridge loan does not cover the total purchase price of the new property?

Generally the new property is more expensive than the old, so the proceeds of the sale are not enough to cover the full purchase price. For this purpose, the bridge loan is usually coupled with a classic amortising loan in the same bank, which is called a matched credit . Either you immediately pay the monthly payments, as soon as the property is purchased, and therefore at the same time as the bridge loan, ie the monthly payments are deferred after the sale of the first property.

What if I can not sell my property on time?

If at the end of the time limit (between 12 and 24 months therefore) your house is still not sold, the first thing to do is to ask why and act accordingly: lower the price , do some work … C ‘ is to be able to allow you to lower the price that the bank does not lend the entire corresponding amount.

It is possible to negotiate additional time to repay the bridge loan, but everything depends on the lender and the amount of the loan. The latter is entitled to demand full repayment of the loan within the prescribed time, even if the property has not been sold.

If despite all the owner can not sell his property he can transform the bridge loan into conventional credit and offer his property for rent in order to pay his monthly payments. Rather than getting there, it is better to lower the price of the good to sell it and get out of this situation.

Types of bridge loans

Types of bridge loans

There are three types of bridge loans:

  • The classic bridge loan , accompanied by a depreciable loan.
  • The bridge loan with “total franchise”, accompanied by a depreciable loan. Here the interest on the bridge loan is not repaid monthly but in one go, together with the borrowed capital, once the property is sold.
  • The dry relay loan : the value of the acquisition is equal to or less than that of the property sold, so there is no need for a depreciable loan.

Relay loan insurance

Relay loan insurance

Lending institutions require borrowers to take out some insurance to protect their investments, but it is equally important for the borrower to subscribe to them to avoid any unpleasant surprises.

Know that it is not mandatory to turn to insurance offered by the bank, you can turn to the broker or insurer of your choice. The lending institution may not refuse the loan to the borrower unless the insurance taken out does not offer the necessary guarantees.

Mandatory guarantees

Generally, lending institutions require only one guarantee: the death guarantee, which is always included in bank loan insurance. In the event of the death of the borrower, the insurance will reimburse the borrowed capital according to the terms and conditions set by the contract.

The death guarantee will also cover total and irreversible disability as well as the total and irreversible loss of autonomy . This type of insurance, however, sets some criteria and conditions (the borrower must not be more than 60, 65 or 70 years depending on the contract) and exclusions (suicide, war, sport or risky activity.)

Optional guarantees

If the other guarantees are not mandatory it is however important for the borrower to subscribe to them so as not to be in a delicate financial situation:

  • Unemployment loan insurance : to subscribe to it, however, you have to be on a permanent contract for several years. In the event of dismissal or loss of employment, the insurance will cover all or part of the monthly payments for a certain period.
  • Disability loan insurance : this insurance will cover the insured in the event of partial or temporary disability.
  • Health Insurance : This insurance must be underwritten if the lender believes that the borrower’s medical history poses a risk.

Grouping of loans and the reunification of debts

Many are the ones who ask us about the grouping of loans or grouping of debts being the reason why we write this. Because at least with us if you want to process the grouping of credits what you must do is process the mortgage loan.

It is through these credits with endorsement how you can get group debts quickly and easily, and above all, with the best possible results. It is of little use to process this financing operation if, afterwards, we do not get what we want, which is ultimately to save money.

Loan grouping What does this process consist of?

Loan grouping What does this process consist of?

Basically the clients what they are looking for here is to gather or group all the credits and debts that they have by passing it all to one. The objective rather than to group is to save money every month since it is assumed that the new financing will have better conditions than the previously signed loans.

That is why from Father Brown we say that it does not always make sense to group credits. It does not have it because if the credits that we want to cancel have better or similar conditions than the new one, little will be noticed. If it is possible that through the new financing we get a longer term but it depends on each one if only based on this it deserves or not worth it.

Reasons to group loans

Reasons to group loans

We have already seen the two main reasons why people want to process this operation.

  1. Get a savings in the monthly payment to pay: Do not sound like the “Reunify / group your debts and save up to 50% of what you pay.”

They say it because in most cases it is true, through the grouping of loans people can achieve a really important savings. Now, what can not be is to always ensure that these are the expected results. As we have said before, we can not always advise taking a group of credits. Therefore it is understood that we will not always obtain the results we want, it is more, in some cases it may even be counterproductive.

  1. Collect all the credits and all in one: Does not it bother you to have many credits each with their respective conditions and terms in different financial?

To most people this usually bothers him being the reasons more obvious. On the one hand because management is not easy at all. Take, for example, 6 loans in 6 different financial companies, each of them with different terms to make payments, interest rates… it is not easy to manage. Most are much more comfortable having to control a single financing than having to do it with many options at the same time. Even so it is a secondary reason in comparison with the one of the saving.

How to process a grouping of credits and obtain good results

How to process a grouping of credits and obtain good results

Because of course, if we manage it as it is not due, it is certain that we will not obtain any results. At least it is certain that we will not achieve the results that we can consider as better. From our point of view, grouping loans should be processed as follows:

  • Before applying for any new loan we have to know the conditions of the ones we already have.

We will only see if it has sense or not to take this management if we previously know the financial cost of those already signed. If you do not know this information, we advise you to obtain it before doing anything.

Does it help to cancel a cheap loan if the new one has worse financing conditions?

Does it help to cancel a cheap loan if the new one has worse financing conditions?

And this answer will only be obtained if you have previously analyzed all this.

  • If the credits you want to cancel through the group have a higher cost than the new one, if management can make sense.

But, what about the increase in indebtedness?

But, what about the increase in indebtedness?

Because of course, the signing of any new credit supposes an increase in the indebtedness of the person. Unless the cost difference between the new and the old credit is very large, it is something we should consider. The signing of new mortgage loans for example supposes, among other expenses, those of appraisal, notary, taxes, agency, study commission, opening….

When the person who wants to group debts is looking for small amounts it may be something that in the end is not worth it.

  • If you want to group debts it is always advisable to try to sign in the long term.

Because not everything is the interest rate that the financial puts. The term in these amounts plays a fundamental role. It is not the same to sign a short or medium term loan as to do it in the very long term. That is why it is always profitable to cancel personal loans without a guarantee for a mortgage loan.

This is because the terms of loans without collateral are usually short, less than 5 years in most cases. In contrast, mortgage loans can be signed at 5, 10, 15, 20 and even 25 years, making a big difference.

It is possible to make a group of loans without endorsement

It is possible to make a group of loans without endorsement

By power we have to say it is possible but it will only be for small amounts of money. And you will not be really processing a “group loan” but you will be signing a loan without normal and current collateral.

You will probably sign one in which the indebtedness of the person asking for the money is not taken into account too much. As such there is no group of loans without endorsement, there is not because financial companies simply do not want to offer it. Not only are they slow loans whose processing is also very laborious but also the risk of default is high.

What conditions and requirements do credits usually have for grouping debts

What conditions and requirements do credits usually have for grouping debts

That not all the loans seen in the market are used to group loans is a reality. That is why we want to show you the characteristics and requirements of these credits.

  • They are loans where you need to provide endorsement, a property in addition.

Vehicles or other guarantees do not work in order to process the financing.

  • The loans are always signed in the long term. This is how the fee to be paid is reduced as much as possible.
  • The property provided as guarantee must be free of charges.

It is possible to make a mortgage loan when the property has loads but it is unlikely.

  • They are the private financiers as well as companies of private capital who are specialized in carrying out this type of financing.
  • The amounts processed are usually medium and large.
  • This financial operation is almost always processed when clients can practically no longer face the debt they have.

When we must process a debt grouping

Because as we have said in advance, its processing is not always justified. For example, canceling a bank mortgage for a private one does not make sense. Only when there is no other option to get the money or when the first is unpaid can you have it.

Here are some of the reasons for processing a loan pool :

  • Do not arrive at the end of the month for the amount of loans and fees you pay? What you need is a reunification of debts, no doubt about it.
  • Do you have difficulty managing the payment of all the credits you have? For this type of situation the grouping can eliminate the problem.
  • For when you want to sign a new loan having already a level of indebtedness more than considerable.
  • If you want to improve the financial solvency of your business this will also help you.

Loan with 120 Months Term – with Instant Confirmation – Small Monthly Installment

What do you expect from your 120-month loan? A quick and easy application process, a quick loan decision and the low-interest financing of a larger loan amount?

Long maturities promise to pay off big loan sums in small installments. Modern application procedures are fast and convenient. With information and suggestions we would like to achieve that you finance cheap.

Find out what loan offers you expect and how to save money. Also, why 120 months maturity for loans in difficult cases is not always optimally chosen.

Loan with 120 months term – target small installments

Loan with 120 months term - target small installments

A loan with a term of 120 months nobody takes “just in between” on, in order to fulfill an ordinary consumer desire. For ordinary consumption, up to the purchase of cars, installment loans with medium maturity serve. Loans with very long terms complete borrowers who move larger sums of money. It would be conceivable, for example, to invest in stable assets.

Not infrequently there is a desire, after a realignment of the current loan obligations, behind the loan search. All in all, existing installment loans exhaust too much liquidity. The household budget becomes inflexible. In most cases, to balance the Dispo grows to an uncomfortable level. A financial liberation, especially in times of low interest rates, seems sensible.

By repaying the entire debt, now in 120 small monthly installments, the budget would again gain more scope for everyday needs. Perhaps even the fulfillment of a long-delayed wish to co-finance the same. Basically all good reasons to get involved in a loan with 120 months maturity. Damage can be a free offer comparison no case.

Long-term bank loan – offers

Long-term bank loan - offers

Overall, the trend in the German loan market is towards higher loan sums and longer maturities. This is noticeable in the comparison of previous loan offers with an excessively long term to today’s range. Good free loan comparisons show significantly more loan offerings with 120 months maturity than ever before. It is no longer just civil servants who are free to use long-term low-interest loans.

Currently there are 7 offers in the Creditend loan comparison, for example, if you are looking for a loan of € 18,000 with a term of 120 months. With regard to earlier loans, the interest rate level has also dropped significantly. Installment loans with a term of 10 years are now offered by banks that do not specialize in particular interested parties. Almost half of the loans are even offered for loan-independent lending.

120 months term – favorable financing costs?

120 months term - favorable financing costs?

With a long term interest rates have a significant impact. The currently lowest-interest loan with a term of 120 months costs 4.44 percent APR. (2/3 loan example Creditend). A total of 18,000 euros net loan amount at 10 years would lead to a borrowing cost of 4,232.25 euros. For the monthly installments would be 185.27 euros apparently very low.

The same net loan amount at 86 months, again financed at 4.44 percent APR, shows the effect of compound interest. The pure loan costs are reduced to 2,913.21 euros. A savings on the loan with 120 months duration of 1,319.04 euros. To save this money would have monthly only € 63.70 additional installment – monthly rate € 248.97 – be portable.

At the same time, the loan with a reduced term would no longer necessarily be the cheapest loan offer. For loans with an 86-month maturity, the 2/3 example currently shows 3.29 percent APR as the lowest-interest financing offer. At a monthly installment of € 231.23, the pure loan costs could be “melted down” to € 2,143.44.

Compared to the lowest-interest loan with a maturity of 10 years, a savings potential of 2,088.81 euros would be feasible. Additionally shouldering 45.96 euros monthly rate, pays off in terms of these numbers startlingly.

Loan debt restructuring in difficult cases – problem definition

Loan debt restructuring in difficult cases - problem definition

Low lending rates make it easier to get into debt. Almost always, modern consumer wishes can be met comfortably on loan. Smaller sums unnoticed funded the Dispo. Often tacitly citizens live about their circumstances. Of course, the “income gap” has a share in this development. Small and medium incomes are just enough for the “necessary”.

The trend reversal is to bring about a loan with 120 months duration in difficult cases. All liabilities are summarized in the debt repayment loan. The repayment in small monthly installments creates the scope to maintain the usual quality of life. Unfortunately, in these cases it often happens that the personal loan rating for lending has already suffered at this stage of debt.

Only a few banks are willing to take on the risk of being granted very long-term financing, with a somewhat weaker loan rating. The risk compensation, within the tight tolerances of legal requirements for safe bank loan, create interest premiums. Risk loans are more expensive so that the bank can create reserves for the expected higher number of loan defaults.

Do not lose sight of financing costs – think about the term

Do not lose sight of financing costs - think about the term

loan with 10 years in difficult cases is recognizable more expensive. There are no alternatives for a private loan, for example, if you have 120 months to repay the loan. As a result, banks, such as Eifel Bank, play a special role. The few providers of risk loans have almost a monopoly position, which is ultimately reflected in the cost of loan.

For the exemplarily mentioned 18,000 euro loan with 120 months running time, would calculate by food bank, according to 2/3 example, 9,12 per cent effective annual interest. The monthly installment shows the representative example with 225.68 euros. From this installment, the total repayment of 27,081.76 euros for 18,000 euros net loan results. For the approved loan with 120 months in difficult cases, borrowers contribute 9,081.76 percent financing costs.

In other words, one third of the repayment is interest costs. In the face of such high costs, the question arises again whether 84 months are not enough. The monthly rate at 84 months, the same loan volume and interest rate, is 287.41 euros. The loan costs would be, in direct comparison to the loan with 120 months duration, reduced by 2939.12 euros.

15 tips. Before you sign a non-bank loan agreement


15 tips before you sign a non-bank loan agreement, not just online.

15 tips before you sign a non-bank loan agreement, not just online.

Below are a few tips that you should take advantage of before you decide on loans, installment loans and choose a loan company.

1. Avoid companies that charge fees for processing a loan application.

2. Do not borrow in companies, from people whose adverts you find on “poles”, giving only the phone number.

3. Check the credibility of the loan company on the internet or contact (Association of Loan Companies). On the website of the Polish Financial Supervision Authority (Polish Financial Supervision Authority), read the list of companies that are suspected of a parabanous activity without the required license. Do not use the services they offer.

4. Do not sign bills of exchange, statements that are disproportionate to the amount of money you borrow. By borrowing, for example, 2 thousand PLN, do not sign a bill of exchange for 10,000 zł.

5. Avoid companies where the cost of borrowing money for 30 days is more than 50% and more additional costs. Borrowing, for example, PLN 1000, you must give at least PLN 1,500.

6. Always borrow only as much as you need.

7. Do not take a loan if you do not know its total costs.

8. Compare different offers from loan companies. Find out what is the best time, check the table of charges, the cost of extending the loan, etc. Read the opinions of other people before making a decision, for example on loan forums.

9. Before signing the contract, make sure how much money you have to give and when.

10. Do not borrow money in a loan company to pay off another liability. Contact the creditor (the company that gave you the loan), inform about the difficulties in repayment of the loan and negotiate the repayment terms.

11. Do not sign a contract if anything is incomprehensible. Ask for clarification of a company employee, lawyer or a person who has experience in this area.

12. Before you sign the contract, read it carefully. See point 11.

13. On the internet you can compare loans in a simple way using the non-bank loan cost calculators.

14. Remember to comply with the terms of the loan agreement ( loans). Settle your commitment in a timely manner. This way you will avoid additional costs, and thus it will be much easier for you to borrow money again.

15. Improve the state of your home finances, learn how to properly manage your home budget, so that you can avoid using loan companies in the future.

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Non-bank loans via the Internet loan companies , non-bank loans via the Internet

Internet Loan on Installments – In a Bank or a Non-bank Company

We can get a loan via the Internet in two ways – from the bank and from non-bank companies. The latter option will, however, be more expensive to pay for more.

When looking for a loan, we do not need to go to the bank for this purpose, but also for this purpose, collect a certificate of income earned from the workplace. Today I will show you how to get a loan online simply and quickly. As in the case of banks only in a few, we will get cash in this way, I also added a few non-bank companies.

A non-bank loan via the Internet in installments, however, differs from those from banking that it is more expensive to pay. Practically from what offer we would not have benefited, it will always be less beneficial to us than the banking one. Therefore, if we do not have a negative credit history and we have adequate creditworthiness (income), then we should choose among the banking offers first.

Where can we get a bank loan with installments and online? Of course, at sbank, but not only because in the last months we have several additional banks that decided to provide loans and credits entirely via the Internet. This is s-mobile. Banking services (formerly operating under the name MeteorSync), Dynasty Bank (under the wings of Crediter) or MyCredit (a new Getin Bank product). So there is a lot to choose from and even if one of the banks does not give us credit, there is a chance that we will get it in the second one. The good thing is that we can check it out without having to visit stationary facilities.

Bank loan on the internet in installments – what will we need?

Bank loan on the internet in installments - what will we need?

What will we need to obtain an online bank loan? Of course, the main document or ID card, banks may require us to send a scan of this document. If we do not have a scanner at home, then nothing is lost. We can also do a scan with a photo, using a digital camera or even a smartphone. It is important that the data from the proof is legible as well as our photo was visible to us.

In addition to the ID card, it will also be necessary to confirm our income but not necessarily in the form of a document issued by our employer. If we receive a remuneration on a bank account, it is very likely that you only need to download the account history from the last few months to obtain the loan. If we have access to our account via the Internet, we can download such an electronic statement after logging into our account. We will be able to deliver it to the bank by sending it via email or via a special form.

As I wrote at the outset, such a bank loan via the Internet will be much cheaper to pay than a non-bank loan. All the more so if we care for a larger amount and a longer repayment period. As part of the sbank and Dynasty Bank offer via the Internet, we can get up to PLN 20,000, in the case of MyCredit it can be up to PLN 10,000. We can adjust the repayment period according to our needs.

Is the loan via installments via the internet also available through non-bank companies? It all depends on what amount we need and how quickly we intend to pay it back. The reasonable offer can be found in the offers of truloan, Smart Bank,

SudCredit or Takto Finanse. The fastest, however, we get it in the first two companies. In their case, the waiting time for a loan may close even a few dozen minutes from the moment of submitting the application. In the case of non-bank companies, it will not be necessary to send income statements or bank statements.

Bank loans on the Internet in installments:

Bank loans on the Internet in installments:

Dynasty Bank – internet credit up to PLN 10,000, repayment of up to 84 monthly installments
MyCredit – internet credit up to PLN 10,000, repayment up to 36 monthly installments
SolBank – Internet credit up to PLN 50,000, repayment up to 60 monthly installments

Non-bank loans via the Internet in installments:

Non-bank loans via the Internet in installments:

TondaBank – installment loan up to PLN 10,000, repayment up to 24 months
truloan – installment loan up to PLN 10,000, repayment up to 36 months
SudCredit – installment loan up to PLN 10,000, repayment up to 24 months