When applying for bridging finance and a property bridging loan, it is important to first make sure you meet the loan criteria. What we mean by this, is that all your documents are in place and you have satisfied the suspensive conditions in your sale/rental agreement.
For a successful bridging finance application, you’ll need the following handy:
- Bridging application form
- Offer to purchase (OTP)
- Guarantees
- Rates clearance figures and levy clearance for sectional title schemes
- Letter of undertaking from your conveyancer
Offer To Purchase (OTP)
An offer to purchase is a legal document whereby the purchaser makes a monetary offer to the property seller. Should the sellers accept the offer and all parties sign the agreement, it then becomes a legally binding document referred to as the sales agreement. The purchaser can stipulate suspensive conditions such as approval of pets, fixing a broken window etc to be met by a specified date, in which case the agreement becomes null and void.
Guarantees
Guarantees demonstrate you have the funds available to cover the cost of the property purchase. As soon as you get your agreement in principle for your bond from the lender, the process of getting a guarantee has begun. Buyers are very rarely granted a 100% bond, in which case a deposit will need to be put down first. This is where property bridging finance comes into play, offering buyers a short term loan to cover the cost of the deposit.
The seller also usually has guarantees, especially if they need to cancel and settle an existing bond. In this case, the bank will issue settlement figures and the conveyancer will determine what amount the seller will receive as property sale proceeds.
Rates Clearance/Levy Clearance
Your local municipality will provide the transferring attorney with rates clearance figures. If the home is in a sectional title scheme, there will also be levy clearance fees. These are payable by the seller. Sometimes these figures are large and sellers will turn to property bridging finance for a short term loan to cover these fees. This is called rates and levy bridging finance. Once these fees are paid, the municipality will issue a rates clearance certificate, and only then can a property transfer proceed.
When you apply for property bridging finance, it’s important to have all your ducks in a row to make for a smooth application process. When you apply on our website, be sure to watch out for communication from the lender and to complete and return any forms they may require timeously. Your conveyancer will need to supply the OTP, guarantees and clearance figures in addition to signing the undertaking. If all the above criteria is met, we look forward to assisting you with your property bridging loan.