Property bridging finance Hillcrest
By definition, a property bridge loan in Hillcrest is a real estate loan intended for a relatively short time period. Its name is says it all as it literally bridges a gap in financing, usually when property is involved. Traditional home loans funded by South African banks are typically long-term loans, lasting between 5 and 30 years. Bridge loans are financed by private capital such as Bayside Finance Solutions. They usually have higher interest rates and loan fees, but these costs are offset by the speed at which they can be obtained with cash deposited into your bank account. We service Hillcrest and are able to underwrite property bridge loans for local home owners waiting for a sale to go through, in a timely manner.
Bridging finance is becoming a more popular source of finance for those looking to raise money for a property purchase under a tight deadline, we at Bayside Finance Solutions and provide the solution you are looking for.
Explanation of property bridging finance
Property bridging loans provide short-term finance to ensure the purchase of a new home before the existing home purchase is completed. Since the onset of bridging loans, their use now includes renovating property, purchasing property at auction, and financing new building developments. Businesses can use property bridging loans to raise short-term working capital.
The bridging finance market in KZN was started to help house buyers complete the purchase of their new home quickly. Many house buyers have to wait it out, relying on the sale of their existing home to finance the purchase of their new dream house. Delays in finalising the purchase, results in the purchase of the new home coming into jeopardy and one may actually lose out on a home you had your mind set on.
Accessing bridging finance in Hillcrest can be accessible in around two to four weeks, compared to a mortgage from a local bank in Hillcrest which could take several months.
In the possibility your existing home takes longer to sell than anticipated, and to help reduce your total loan amount, it is advisable to continue making repayments so you’re not left with a large lump sum to pay back.
How does property bridging finance work?
A bridging loan is calculated by adding any debt owing on your existing Musgrave home to the value of your new home, and then subtracting the potential sales price of your existing home.
The amount leftover is called the principal and in most cases during the bridging period you’re only required to pay back the interest calculated on the principal. Interest will be compounded monthly though at the standard variable rate and added to your principal or ongoing balance. This amount will become your mortgage on your new property once your existing home has sold.
Before considering a bridging loan, it’s recommended you have at least 50% of your existing home’s value in equity, in order to avoid paying a sizeable amount of interest. And bear in mind that during the bridging period, you’re essentially paying off the interest on two properties, so selling your existing home is a priority
What are the benefits of bridging finance for your home?
Allows you to move rapidly on the purchase of a new home, without worrying about selling your existing home first.
Provides a viable option when high loan to value financing from a bank is not available.
It also offers finance to build a new home while you live in your current home.
A mortgage really isn’t an option, as this can take weeks, and getting a definite buyer for your current property may take time. This is one of the most common reasons why Bayside Finance Solutions has more and more clients wanting advice and a bridging solution, as it helps to ‘bridge’ the gap between selling and completion, enabling you to obtain your dream home.
What are the risks of property bridging finance in Hillcrest?
We make our customers aware that this is a slightly more expensive source of finance compared to a traditional bank mortgage and you could run the risk of your property being repossessed if you cannot keep up with repayments in the long-term. The biggest risk with bridging finance is overestimating how much you are going to sell your existing home for. If your home sells for less than what you anticipated, your bridging loan may not be enough to cover the cost of your new home and you could run the risk of ending up with a far bigger debt to repay.
If your existing home takes longer to sell or the sale falls through, you could find yourself dealing with a larger debt. The lender could also increase the interest rate on your mortgage if your existing property doesn’t sell within the allotted bridging period. finance takes away the pressure of having to match up settlement dates, letting you sell your house without worrying about losing it entirely. It is the best way of buying the home you want immediately without having to wait, letting you secure a new property without having to spend days or weeks worrying about selling your existing house first. It is also an ideal option for finance if you’re considering building a new home in Hillcrest while you live in your current home.
It’s a situation you might find yourself in if you’re buying a new house but still need to sell your old one to fund the purchase. Technically, it actually means you have to service two loans at once for a while, but the bridging finance loan can be a great option. It’s important to let us help you to get your bridging finance structured correctly so that it doesn’t leave you with a larger-than-necessary ongoing debt.
There are two different kinds of bridging finance. Closed bridging finance applies when you’ve already sold your existing Hillcrest home and agreed on a settlement date. but you have, also bought a new home that settles before the sale of your old property. Therefore, for a short period of time, you will own both properties and the debt that goes with it.
Open bridging finance applies when you’ve bought a new home but haven’t sold your old one yet. You have agreed to buy your new dream Hillcrest home but don’t know when or for how much you will be able to sell your existing home for. This is a much riskier scenario than closed bridging finance because we don’t know when you will be able to repay your bridging loan. Your old house could take many months to sell, and it might not achieve the price you were expecting.
Regardless of which situation applies to you, Bayside Finance Solutions may be able to offer you property bridging finance. Talk to us today to discover your full range of options, and to make sure your bridging finance is structured to your best advantage.