Bridging Finance

Bridging Finance

Bridging finance is a method of financing, used to maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash. Bridging finance is commonly used when the cash flow from a sale of an asset is expected after the cash outlay for the purchase of an asset.

Our bridging finance solutions help you to accelerate access to funds that may only be due to you at some future date. A client uses Bridging Finance to turn profits or equity on a property transaction into cash, without the hassles normally associated with traditional forms of borrowing such as bank loans.

For example, when selling a house, the owner may not receive the cash for 90 days, but has already purchased a new home and must pay for it in 30 days. Bridge financing covers the 60 day gap in cash flows. The term “bridging” finance therefore describes the position where the finance is required to bridge the gap between the time you sell your home and the time that you actually get paid.

To work out your surplus: Take the selling price of your house; deduct your current outstanding bond amount and any legal fees and other costs like the estate agent’s commission. This will leave you with your surplus.

For example:

For example: Price for your house: R 600 000
Minus your outstanding bond: -R 300 000
Minus the costs*: -R 50 000
This leaves you with a surplus of: R 250 000
Bridging Finance advance (80%): R 200 000
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