Bridging Finance

What is bridging finance?

What is the TUHF bridging finance product?

As the name suggests, bridging finance is financial assistance to either the buyer or seller of a property for a short amount of time.

For instance, once a seller receives an offer to purchase, they must get a rates clearance certificate. Depending on the size of the property, few sellers might have access to the amount of funds required for the certificate to be issued. If the purchaser has applied for a TUHF mortgage facility, we can assist as this is a critical step in the process to facilitate the change in ownership.

In our example, the seller might make R5-million from the sale of the property with the rates clearance coming in at R1-million. TUHF will loan the R1-million to the seller and recoup the outlay plus interest from the sales proceeds. The transferring attorneys appointed by the seller will then be requested to transfer the funds once the guarantee has been lodged for the property.

What are the requirements for applying?

TUHF limits participation in bridging finance to those transactions where it has already offered a long-term mortgage facility.

And if it is the seller who requires access to bridging finance, TUHF needs to have confirmation that there is a loan facility for the purchaser already in place.

What are some of the other examples where one can benefit from the bridging finance product?

Bridging finance can also assist once the property is sold. For instance, the seller might need to urgently access funds and cannot wait for the conveyance process to be completed. TUHF bridging finance can assist and simply have the conveyance attorneys pay the amount plus interest over once the property has been registered.

In another example, a new client went to an auction, purchased a property, and paid the deposit. They approached TUHF for the long-term mortgage facility. However, we discovered the property does not have any existing architectural plans in place resulting in no health and safety compliances. This means the property cannot be insured and is effectively illegal.

One of the conditions of the client being able to get approved for the mortgage is to ensure that the health and safety compliances are in place. In this instance, bridging finance can be used to assist in this regard.