Amounts: R250K +

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Speed of Funding: Medium

Terms: 6 months - 5 years

Repayments: Monthly or end of term depending on lender. If end of term an exit strategy is required

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Interest Rates: Lower than unsecured


What is a Property Backed Loan?

A property backed loan is type of secured loan where the property is used as security. This is ideal for a business with a temporary cash-flow shortage. It allows you to free up the equity locked up in un-bonded property to secure fast and flexible credit.

The loan facility can be structured in a few ways depending on the lenders product offering. Some examples include:

1.    As a term loan, where the borrowed amount is then repaid in equal instalments over a fixed period of time

2.    As a revolving loan facility where an overdraft facility is provided and you service the interest portion of monies borrowed on a monthly basis

3.    No monthly repayments required because interest and capital is repaid together at the end of the term. This structure is very attractive if you are working on a deal which only receives payment on conclusion.

 
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ADVANTAGES

  • Improved liquidity

  • Higher levels of flexibility

  • Stepping stone to other products through building a trust relationship with your provider

  • Lower costs and interest rates than unsecured loans

Disadvantages

  • The property must be worth at least R 625 000 (dependant on lender)

  • Minimum advance of R 250 000 (no maximum)