A property bridging loan was designed for when you are waiting for funds to be freed up from the sale of your home.
Sometimes it takes a long time to finalize the sale of your home and this could cause cash flow problems. If you are looking for another property and find one, you may not have the funds needed for the deposit and this could cause you to miss out on purchasing your dream property. A bridging loan could also be used to pay for the transfer or registration fees on your current property.
Depending on how long it takes for the sale to be finalized this money can sometimes take very long to reflect in your account. A bridging loan can be very handy to pay the deposit on your new house so you don’t have to miss out on the deal of a lifetime. A property bridging loan is a short-term fix that gives the clients access to the money is owed to them while they are waiting for the sale to be finalized.
What exactly is a bridging finance loan and how much can apply for?
This loan allows our clients access to the money they will receive from the sale of their house. Before the registration and transfer process has been completed. This money can then be used to settle the transfer fees or used to secure a deposit on a new property.
Our clients can apply for up to 80% of the money that is coming your way
A bridging finance loan is a short-term loan that can tide you over for up to 3 to 4 weeks, while they are waiting for the cash from the sale to reflect. The loan is very cleverly named because in a sense it creates a bridge between finances. The client can then use the loan until their own money is made available.
This loan will help free up cash flow. The process of finalizing the sale can take between 6 weeks or longer to be completed. A bridging loan is perfect to bridge the gap during that time.
Who is allowed to apply?
You may apply if you are a real estate agent or if you own an estate agency and you are waiting for a commission. You may apply if you are a property owner that has sold their home and you are waiting for the money.
This loan may be applied for by clients that wish to apply for a further mortgage or a bond on their existing property.
How much funding may I receive?
Estate agents may apply for 85% of their net commission. Property owners may apply for up to 80% of the net sale of their property.
A bridging loan is a form of a short-term secured loan that can be used to bridge the gap in your cash flow. The lender needs to ensure that your claim is legitimate and you are getting the money you say you are, in order for you to borrow against it.
What is the cost involved in applying?
The benefits of this type of loan include:
- Use it for a deposit on your new property
- Help increase your daily cash flow
- You won’t need to wait for the money from the sale of your home
- Use this money to build a new property while you are living in your current home
Problems could arise if:
- The sale of your home falls through or the sale is cancelled
- The sale could take much longer than expected
- The property could sell for much less than you expected
Things to think about before applying for a bridging finance loan
Consider the following before you apply:
- How long will you need the money? This will affect how much you will be charged and could affect your interest rate
- How long do other for sale properties in your area take to sell?
- Are you going to be buying or building your next property?
- Do you have any other loans? Could you afford to make payments on both loans?
Will bad credit affect my loan application?
If you have bad credit this won’t necessarily negatively affect your chances of having your bridging loan approved. Once the lender has checked with the broker that everything is in place, and everything checks out, then your loan has a high chance of being approved. The lender will decide if your application is approved depending on the merits of the sale. A bridging loan is a short-term secured loan solution for when you need cash on hand. The funds are secured by the money that you will be receiving from the sale of your home as soon as the registration and transfer process has been completed.
Other types of bridging loans that are available
You can apply if you are expecting money from the following:
- A payout from your provident fund
- Money owing to you from retiring
- Money owing to you from a divorce
- Money owing to you from being retrenched or dismissed
How long will it take to receive funding?
A bridging loan can take between 72 hours and up to a couple of weeks to be approved. The time that it will take depends on a number of different relevant factors.
Documents to be submitted with your application
You will need to supply the following when applying for a bridging finance loan:
- You will need to supply a copy of your South African ID
- Proof of address such as a municipal account
- A copy of your last 3 months bank statements that are stamped by the bank
- A copy of your signed validation certificate
- A signed offer to buy your property (signed by all relevant parties)