Selling property is a lengthy process, even without delays. You’ll only get the proceeds from a sale at the end of the process when registration has taken place.
What can you do when you need access to funds but registration hasn’t been finalised? You can get a property sale advance loan.
What is a property sale advance loan?
A property sale advance loan is an advance on the money you expect to receive from the sale of your property. When your sale is finalised and you’re awaiting registration, you can apply for a loan in expectation of this money.
Once registration has happened, you use the proceeds from the sale to repay the loan in full.
How much can you get as a property sale advance loan?
Usually, you can get up to 75% of the net proceeds of your property sale. This will depend on the loan provider.
Net proceeds refers to the profit you receive from the sale. First, you must take off any applicable deductions, such as settling your bond or paying the estate agent’s commission.
The net proceeds is what’s left. You can apply for 75% of that.
Reasons to consider a loan against the sale of property
The number one reason that sellers need a property sale advance loan is to cover deposits, moving costs and other expenses that are required upfront.
These expenses are due long before registration takes place, so most sellers find themselves short. Expenses associated with selling a house include capital gains tax, municipal rates and taxes, compliance certifications, bond cancellation fees, moving costs and deposits on a new house.
What to check when choosing an advance loan provider
There are many lenders who offer property sale advance loans, also known as bridging loans or bridging finance. They’re not all legitimate.
To protect your rights as a borrower and so that you don’t get charged exorbitant interest rates, make sure you choose a lender that’s registered with the National Credit Regulator (NCR).
The NCR ensures the fees and interest rates associated with loans and credit are compliant with the National Credit Act (NCA).
How to get a property sale advance loan from lamna
We offer property sale advance loans of up to 75% of your expected net proceeds. To get a property sale advance loan from lamna, you’ll need to submit the following documents:
- signed deed of sale
- signed transfer documents
- guarantees for the purchase price (in most cases a bond).
Why choose lamna for property bridging finance?
We offer short-term finance solutions including bridging finance and asset-based loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.
We’re a well-established and registered financial services provider with offices all over southern Africa. The terms of our property sale advance loans will be discussed with you and clearly outlined in a signed contract. We’re registered with the NCR, so our fees and interest rates are NCA compliant.
For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
|---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.