What is Property Bridging Finance?
A bridging loan or “bridging finance” is a short term loan, typically taken for a short period between 2 weeks and 12 months with a view to moving to longer term financing or exit strategy.
Bridging loans are generally used in property purchases / acquisitions when a decision needs to be made quickly. Bridging loans can help too:
- Stop property getting repossessed
- Take advantage of a short term opportunity
- Purchase your dream home whilst you wait for your current home to sell
Bridging loans are generally repaid when a property has sold or alternatively refinanced through a traditional lender. A bridging loan is known in the lending market a non-standard loan as its a short term loan with unusual circumstances.
Bridging loans in the South Africa can be used not only for property, but also for businesses too. For businesses, bridging finance is generally used when a company requires additional funds to help boost its cash flow or for acquisition purposes. Bridging loans for property can be used to break property chains and provide a short term finance solution where there is a delay between sale and completion dates.
Another typical reason why bridging loans are taken, is when properties are purchased at auction, additionally developers & landlords can use bridging finance for development or renovation purposes.