Bridge Loans Information South Africa

1. Bridge Loans

No, a bridge loan is not a loan to help you buy a bridge, but if you need help with refinancing debt or want a loan to help you put a down payment on the home of your dreams, a bridge loan may be the right option for you.

A bridge loan is a short-term loan that you can use it when you need money or financing for particular project. It is a way to set up financing so that you can use money and have immediate cash flow for a particular project you’re working on. Sometimes with the short term loans you can have up to one year to pay them back, depending on how the financing is set up. These are also considered swing loans as they are short term loans or interim finance loans. If you’re thinking about taking out a loan, consider a bridge loan because they’re in essence, bridging the gap.

What Are the Most Common Ways That a Bridge Loan is Used?

When you’re buying real estate, or you are investing in the real estate market, a bridge loan can help you because it can give you a source of income in between the time when you’re buying one property and when you are purchasing another. Bridge loans are also good for companies as they may need financing when they set up equity financing and sometimes the payments might be stretched out where they’re not expected to close for several months. What you don’t want to have happen is 2 or 3 months to go by where you haven’t closed and you still need the down payment on your new home. What the bridge loan does, is it helps to give you a source of working capital in equity until the next round of money comes through for you.

Is a Bridge Loan For Me?

That’s a good question that you have to ask yourself in terms of whether or not you may be someone who can utilize a bridge loan. A bridge loan may be for you, but keep in mind the terms are shorter. Terms can be set up for anywhere from two weeks or 3 years in repayments and you have to factor in things like what if you don’t close on that house? Or if you were to get a bridge loan and then fallen sick, what is your back up plan and how will you pay it back?

In parts of South Africa the bridge loan is considered bridging finance. In understanding of a bridge loan is right for you, you might have to ask yourself if you can afford it and you may want to consider the risk that are involved in bridge loans. Generally when you have a bridge loan the interest rates may be a bit higher because the lenders understand there’s additional risk involved. There may be higher interest rates. You may have to be pay a fee just for taking out a bridge loan and it could equal 1% of what the amount of loan actually is. There may be other costs involved depending on the time that you have to loan taken out for, so these are all questions you want to ask.

Bridge Loans and Their Usage

The bridge loan may be used when have real estate investments or estate deal that’s been transacted and there’s a lack of time in between when the property will sell and close. Sometimes bridge loan financing is an excellent way to bridge the missing currency that’s needed, almost as a float, to ensure you have the money you need. A bridge loan can be established in order to take advantage of what might be considered a short-term opportunity or goal that you have in order to get long-term financing. Contact us today and we’ll help you get your bridging loan started.