What is bridging finance?

Private Property South Africa
Property Power

Bridging Finance allows purchasers or sellers to have access to cash before the registration and transfer process has been completed.

The seller is able to use the funds to pay outstanding rates and taxes, for example. The purchaser can use the funds to pay the transfer fees so that the transfer process is not delayed.

Bridging finance can be a useful tool to help you out of a ‘catch-22’ situation, like having to wait for the profit of the sale of your house to pay for the registration and transfer costs of your new home.

VERY IMPORTANT: Make sure you understand all the costs involved when using this type of short term lending. Find out if there are administration costs, what interest will be levied, and so on because this type of financing can be expensive.

Most institutions that provide bridging finance will only finance up to 80% of the surplus money which you will receive from the sale of your property.

This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here

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