Top 5 bridging finance loan providers
Bridging finance is a short-term loan that enables you to pay for important property costs when you do not have immediate access to your own funds. It is quite expensive but importantly, enables a property transaction to proceed without delay.
The top five South African bridging finance loan providers are:
• Homeloan Junction
• Roma Finance Bridging Loan
• United Trust Bank Bridging Loan
• Shawbrook Bank Bridging Loan
• Fortwell Bridging Loan
Bridging Finance is an interim financial solution
Bridging finance is a short-term loan, usually for a period of two weeks to about three years. It is interim financing before a permanent loan or the next stage of financing is settled. Once the permanent loan is acquired, some of the money is used to settle the bridging loan before proceeding with the other financial obligations.
The Ins and Outs of Bridging Finance
Bridging finance is more expensive that other forms of financing. The extra interest levied on the loan takes care of the risk involved in dispensing the loan. The fee paid for processing the loan is also higher than that of conventional loans. There might be other costs that are amortized over a shorter period such as equity participation for the lender. When applying for a bridging loan, the lender may ask for collateral from several sources and a lower loan to value ratio in order to cover the extra cost. Nevertheless, the process of applying for the loan can be quite simple.
How can a bridging loan help you?
• Access funds during the sale of your property
You’ve sold a property and it takes up to 90 days, and longer, for the transfer to be registered and the sale proceeds to be paid to the seller
• Pay outstanding accounts
You need to pay for rates and levies in advance in order to obtain a clearance certificate
• Get money for Deposits, Transfer duties and more
You need to pay the deposit, transfer duty, or the shortfall on the bond on a new house and you’re waiting for a fixed deposit to mature
• While you wait for your Further Loan
Applying for a further bond and the proceeds thereof will only be paid to the property owner on registration of the bond in the Deeds Office.