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BRIDGING LOAN FAQS
A bridging loan is a short-term interest-only bridging finance loan available to those that need immediate access to capital. It is a loan to ‘bridge’ the gap while other finance (such as a mortgage) is secured by the borrower or whilst a sale is being negotiated. Bridging finance is secured, meaning the borrower uses property (or land) as security to the lending institution.
Tempus Capital receives funding through private investment. We use a variety of funding sources ranging from high net worth individuals through to traditional banks.
Any individual or limited company can apply for a bridging loan.
Bridging loans are mainly used by clients that need quick, short-term capital to fund a property purchase. They include those who:
No. We lend on residential, semi-commercial and commercial properties including HMO's, permitted developments and land. The construction, type or use or the property doesn’t matter either.
As a short-term loan, they are generally taken out for up to one year. However, it is not uncommon for some bridging loans to last for up to two years.
Typically, the minimum amount that can be borrowed for a bridging loan is £35,000. The maximum amount of funding depends on both the value of the property used as security, and the loan to value. Tempus Capital has lots of experience in lending multi-million pound sums.
Flexibility is key. When it comes to loan repayment – unlike a traditional mortgage – there are usually no penalties for early repayment. More importantly, a bridging loan allows you peace of mind to set your own schedule and avoid an overly rushed process. Imagine a new investment property becomes available and you know it’s right for you. A bridging loan will allow you to purchase the new property. Depending on the duration of the loan, the extra weeks or months can be vital.
Unlike a typical mortgage, bridging loans are more expensive. However, due to the short-term nature, the out-of-pocket costs are small relative to the plethora of benefits. Other fees such as an application fee, administration fee and property appraisal fee can also apply. Interest can be serviced if approved or rolled up if requested with some lenders.
A ‘first charge’ is the primary mortgage or loan secured against a property. This takes precedence over all other finance secured against it. If there is sufficient equity in the property, however, then a ‘second charge’ loan could be secured against it.
Each case is reviewed individually. However, if all the paperwork is complete then a client could receive funds in as little as 12 hours.
Our experience means that in most cases we will be able to confirm almost straightaway whether your client’s application is likely to be successful.
From the initial enquiry through to completion, our average turnaround time is just two weeks. However we have done deals in 48 hours.
A credit check is not carried out by Tempus Capital unless we are given permission to do so by your client. We may ask for the borrower to provide one.
Once we receive the bridging finance application form (and the certified identification documents) we will issue indicative terms. We will then book a valuation and legals at the same time if time is of essence. Once the valuation report is completed and legals satisfied funds will then be sent to the solicitor for completion.
This depends on the individual circumstances of the borrower. However, the interest rate ranges between 0.75% to 1.5% for each month of the loan, and the borrowing is done on an interest-only basis.
Yes. Once the borrower secures longer term funding then the bridging loan can be paid early without penalty in most cases.
As bridging loans are for the short-term, each client must have a plan in place to pay off the loan. This is known as an ‘exit route’. This can be a sale or a refinance for example. A viable exit route is a must on all bridging loan applications.
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We do bridge loans, property finance, bridging loan, auction finance