Selling your home doesn’t mean instant cash to stash and you will often have to wait a while for transfers to go through. This is where bridging finance can act as a short term micro loan secured against the income that will soon be coming your way from the sale of your home. “Bridging finance” is just that: a “bridge” to carry you over until you receive your money in the near future.
Why get bridging finance?
Time delays in property transactions are inevitable as you will have to wait until the entire transfer has taken place before you can access the proceeds of your sold property. In the mean time you may have some significant amounts of cash to dish out such as transfer fees, the deposit on your new property, fees of conveyance attorneys, duties, and agent commissions. These expenses can’t wait for the transfer to take place and need to be paid immediately. This is where taking a small loan as bridging finance can help you pay your debts before your money comes through. Lenders will usually give you about 80% of the net amount owing to you in the future to cover these expenses.
As with any kind of loan, you will need to pay interest on the money that you borrow. Unfortunately, bridging finance products usually come with higher interest rates than other types of personal loans. This is because bridging loans are short term loans and the money you need becomes available very quickly, usually within 24 hours after you have applied for it. Interest is calculated on a daily basis.
How can I apply for bridging finance?
Most companies provide an online option for you to apply for bridging finance and the process is quick and easy, allowing you to get the money as soon as possible. After you have completed the online application form, you will usually be required to submit other documents via fax.
Although each lending company may have a different policy, the documents you need usually include:
- An identification document
- A utility bill or other form of proof of address
- Proof of your income
- Bank statements of the last 3 months
- A mortgage statement
- A valuation certificate
- A copy of the Offer to Purchase (signed)
- Information about liabilities you already have, such as credit cards, school fees, debit orders and retail store accounts,
- If you have a second mortgage you may need a letter of confirmation from the bank.
How can I find a bridging company in South Africa?
South African bridging finance loan companies are registered through the National Credit Regulator and can provide finance for the three or more months it takes for a property to be transferred into the new buyer’s name. Some of the best known companies providing bridging finance in South Africa are:
- CapX Finance: This South African company offers bridging finance for property sellers in South Africa and Namibia.
- Cash on Demand: As its name suggests, this bridging finance company offers quick cash and has offices nationwide.
- Smartbridge: This is one of the leading bridging companies operating in South Africa, having been in the business for over 8 years.
- Quince Property Finance: This company offers low rated bridging fiancé for South African property.
- The Bridging Factory: This bridging finance company has a large licensee network and offers a broad spectrum of property and real estate based bridging finance solutions.
These bridging finance companies are registered with the Bridging Finance Association of South Africa (BFISA). This means that that agree to ethical conduct, professionalism, truth in advertising, prescribed practice rules, regulatory compliance , consumer data protection, and other such terms of business.
Thanks to such bridging finance loan companies, people waiting for the proceeds from their property sales can take comfort in the fact that their expenses can be covered in the mean time. This loan can be paid back as soon as the property transfer has gone through and they will be free to enjoy their new homes.