Bridge finance is used to cover financial obligations in anticipation of a windfall, such as the profits of a sale or a settlement payout.
This is commonly used in real estate when you need to cover the costs of selling your property, but the transfer hasn’t yet gone through – so you don’t yet have access to the proceeds of the sale.
Bridge finance may also be offered as an advance against an expected payout, for example as settlement of an insurance or accident claim. Payments on these claims sometimes take months to come through, and a bridge finance may provide much-needed financial support in the interim.
Benefits of bridge finance
Bridge finance can help you cover the upfront costs of selling your property, such as taxes, clearance certificates and rates. The proceeds of a property sale often don’t come through quickly enough to cover these costs and not everyone can afford them out of pocket.
Often, bridge finance doesn’t require a monthly payment for the first few months. This means you can potentially take out the loan and pay it off with your proceeds before you have to start repaying the loan.
Bridge finance also doesn’t saddle you with long-term debt because it’s designed so you can pay it off in full once you’ve obtained the expected funds, whether from a property sale or other payout. It’s usually long-term loans with high repayments that cause financial woes. That’s because they’re a drain on your finances every month.
Bridge finance with Lamna
At Lamna, we offer two types of bridge financing – financing designed to cover the upfront costs involved when selling your property, and financing against settlements of claims against the Road Accident Fund (RAF).
Bridge finance on property sales
We can provide up to 75% of the expected funds from the sale of a property as bridging finance.
To apply for bridge finance you’ll need the following documentation:
- signed deed of sale
- signed transfer documents
- guarantees for purchase price.
Bridge finance on RAF settlements
For bridge finance that serves as an advance on a claim settlement from the RAF, you’ll need to supply a settlement agreement or Court Order with the RAF.
At Lamna, we also offer same-day asset-based loans against the value of a wide range of personal assets, from luxury watches and jewellery to vehicles. Our interest rates are competitive, and we’re fully compliant with the National Credit Act.
Client borrows R10,000 for 90 days.
Total Cost of Loan
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.