Bridging finance is a financial solution, typically in the residential property market, to bridge a gap in financing until a longer-term solution can be arranged. It is typically used by individuals or businesses who need quick access to funds for a short period of time.
Andrew Church, our CEO, explains: “As a rule, bridging finance is only advanced to sellers once they have sold their properties and the conditions of the sale have been met, with the loan period averaging 45 days.”
The qualities of bridging finance make them well suited to these transactions, allowing property sellers who are essentially also home buyers to fund their requirements quickly.
Apart from its use in seller transactions, bridging finance can be used for a variety of purposes, such as settling arrear rates, advances on estate agent and bond origination commissions; funding a property development project, or covering a short-term cash flow shortfall in a business. It is typically secured against the borrower’s existing property.
How much does it cost?
The cost is a daily charge of 0.150% per day. On an amount of R10,000 it will cost R15 a day. Thus, if the deal was for 30 days that would cost R450 in total.
Rodel does not charge any administrative or penalty fees, but the minimum total cost will equal the higher of R250 or 18 days fees on all transactions, (should the transfer take over 120 days the rate from then on reduces to 0.049% per day).
Conclusion
Bridging finance is a short-term financial solution commonly used in the real estate industry that enables you to gain early access to funds due to you. If you want to know more about how we can assist in bridging a financial gap in your property transaction, give us a call on 031 303 7722 or email: info@rodel.co.za.