Waiting for your pension fund payout? You can get quick access to that money
Have you just resigned? Have you perhaps been retrenched? If you answered yes to any of these questions, it means you might need access to cash faster than it will take for your pension fund to payout. This is where pension bridging offers a solution!
You will be able to apply for a loan amount of up to 10% of the total payout that you are waiting for. This money can be used to bridge the gap in your finances while you are waiting for your payout.
When can you apply for a pension bridging fund?
If you have been contributing towards a pension fund that means a certain percentage of your salary has been paid directly into a pension fund. A pension fund is designed to provide you with a lump sum in case of retrenchment, resignation, divorce, or retirement.
You have now taken the decision to resign, you have been retrenched or you will be retiring, but what happens to the pension fund or provident fund that you’ve been contributing to all these years with your current employer?
Once an agreement has been reached between you and your employer they have to apply for the withdrawal of your pension fund and ultimately this is due to you once all the paperwork has been completed.
During this period, you might need access to funds. You can apply for a pension bridging fund, which is secured against the payout of your pension fund.
Pension bridging finance has been tailored to meet the financial needs of those individuals who need access to funds whilst awaiting a large sum of money from their pension payout. If this is you, then pension bridging finance is the best solution.
Other types of bridging loans
You can take a bridging loan against, for example, a pension or provident fund payout, a payment for an unbonded property that may have been sold or an RAF claim. A bridging loan is a loan that can be taken out against the knowledge that you will be receiving a cash injection soon.
Are you awaiting an RAF payment? A bridging loan is the solution!
Claiming from the RAF can be a long and difficult process that will involve lawyers. This can be a costly time. If you were seriously injured you may also not be able to work and have medical costs that need to be paid. This is where an RAF bridging loan can assist you.
If you are awaiting a payout from the RAF you can apply for a bridging loan of up to 80% of your total expected payout. This can help you to fill your financial obligations while you wait.
You will need to supply the lender with all the information regarding the accident including your accident number from the police and all your medical expenses as well as proof of your loss of income. You will also need to give them proof of the amount that will be paid out to you and the expected date as this will affect your loan amount and your interest rate.
Use the proof of the sale of your property to apply for a property bridging loan
If you are an estate agent or a homeowner who has sold a property then you may qualify for a property bridging loan.
As an estate agent, you can apply for up to 85% of the net income, in the form of your commission, from the sale of a home. If you are a homeowner you can apply for up to 80% of the value that you will be paid out for your home in the form of a property bridging loan.
The sale of a home can often be a lengthy process as there are many people involved including the province’s deeds office, lawyers and different estate agents. This can delay the payment of funds to you for the sale of a property. It is often the case that the homeowner needs these funds for a deposit on a new home or for renovations or to pay off other debts, amongst other things. If you can provide a lender with a signed offer to purchase the property stating the amount that you will receive then you can apply for a bridging loan while you wait for the monies to be paid to you.
How to apply for a bridging loan?
To apply for a pension bridging loan you will need proof of your retirement or retrenchment as well as your new appointment if applicable. They will also require bank statements or payslips and your ID.
You should also have the latest statement of your pension fund value available as this will determine the amount of money which you can apply for. Once you have applied the company will perform a credit check and verification to make sure that all of the information that you have supplied is correct.
Make sure that you are aware of any fees and interest that go with your loan as these will contribute to the total that you have to pay for. Many companies charge up to 24% per annum (per year) on the amount that you borrow as well as a once-off initiation fee and monthly service fees.
Documents needed to apply for pension fund financing:
- Pension fund bridging loan application
- Most recent pension or provident fund benefit statement
- South African ID or passport
- Three months bank statement
- Letter from employer confirming provident fund package
Understanding the online loan application process
If you’re unsure about which way to go when selecting the credit provider for your online loan, find out from friends and family if they have been in a similar situation and who they used and received good service from. Your preferred bank might offer a product like this, and if not, there are a plethora of lenders out there that are happy to assist you with the product you’re after.
Specialised bridging finance lenders
There are also many lenders who specialise in specifically bridging loans as shown below. Once you’ve decided, going online and finding the application page is the easy part. You’ll find a list of criteria that you need to meet before applying and as mentioned above, a few documents that are necessary to do the standard credit checks.
For pension bridging finance, you have to request a recent statement of the fund naming the beneficiary, total value and other pertinent information for the approval of the loan. Make sure you have proof of employment and recent payslips. The other documents include a South African ID and current proof of residence.
What can I expect to pay for bridging finance?
Well, how much do you need to borrow? All rates charged abide by the National Credit Act, so you can be sure that whatever the charge is, you’ll be covered in terms of fairness. The total cost, however, depends on the amount borrowed and the repayment term.
Your rates are going to be determined through a few contributing factors such as your current credit score, as well as your risk profile. Try and get your credit score in order before applying for this loan since it will impact the rate you incur on your agreement. Lenders may have an initiation fee as well as admin fees that need to be taken into account when applying. Make sure to read all the documents received for the information regarding these fees before accepting your loan.
How soon do I have access to the funds?
Once your online application has been submitted and thus received, a credit check will be performed by the consultant handling your application. All the checks need to be checked out, and when they do, they’ll send the agreement to you for approval and final sign off. Assuming you’re happy with the terms, conditions and rates, you can sign and accept the loan. This process can take anything from a few days to up to a week.
Isn’t that amazing! No mess, and certainly no fuss! In just a few days, you’ll have access to the funds that assist your daily life until the lump sum pension is in your bank account.
What if I don’t get a loan approval?
Unfortunately, this can be the case for some. However, don’t feel as though it’s the end of the road, you simply need to find out the reasons behind the rejection of the application and get those few things in order.
Your affordability is the key factor for any loan. If you have not been approved then you should find out what the reason was. Do what you need to remove the blacklisting off of your name, or improve your credit score and re-apply as soon as possible. It doesn’t matter how many times you apply. Most lenders will take into account that you will be receiving a lump sum cash injection very soon.
Losing your job or resigning is a very challenging position to be in, but creditors have got you covered with a pension bridging loan. If you’re approaching your new position soon, then the period in between will certainly feel less stressful without having to endure the burden of no income.