Second Charge Bridging Loans
Need fast access to funds without disturbing your existing mortgage?
Second charge bridging loans could be your answer, offering quick, flexible financing options for property owners.
If you need quick access to your equity then a bridging loan can help. No need to change your main mortgage.
Short-term loans up to 70% LTV.
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What are Second Charge Bridging Loans?
If you own a property and need cash fast, a second charge bridging loan could be the answer.
These are temporary finance solutions that allow you to borrow against a property you already have a mortgage on.
Think of it like this: your first mortgage is the main loan on your property. A second charge bridging loan is an additional loan that sits behind it.
It’s called “second charge” because if you ever couldn’t pay back your loans, your first mortgage would be paid off first during the repossession process.
These loans are usually needed for a few months to a couple of years. They’re designed to get you cash fast, for time sensitive opportunities or unexpected expenses.
How Do They Work?
As with all secured loans, a bridging loan accesses the equity in your property.
Property equity is the value minus the outstanding mortgage.
Here’s a simple example:
Property Value £500,000
Main Mortgage £200,000
Equity = £300,000 (500k-200k)
You can’t borrow all of this £300,000 equity value. (Then you will have borrowed 100% of the value).
On a second charge basis, our lenders will go up to 70% LTV. This 70% percentage will include the main mortgage.
Here’s how that works:
Work out 70% maximum figure:
£500,000 x 0.70 = £350,000
Take away current mortgage:
£350,000 – £200,000 = £150,000
In this case the maximum second charge bridge would be £150,000.
The Application Process
In the world of mortgages and property finance, bridging loans stand out with their ease of application and speedy payouts.
Once you have identified that a 2nd charge bridge is suitable, your broker will select the best lender for you.
The lender will assess your application and also needs to get the property valued. Often this can be done automatically, meaning approval within 24-48 hours.
Then it’s up to your solicitor to sort the legal side out, before you get your cash.
Benefits of Second Charge Bridging Finance
Fast Access to Cash
One of the biggest benefits of second charge bridging loans is speed. If you need cash fast, these loans can be arranged in days. This can be a real lifesaver if you have a time sensitive opportunity or unexpected expense.
Keep Your Existing Mortgage Intact
With a second charge loan you don’t have to change your existing mortgage. This can be really useful if you have a great rate on your current mortgage that you don’t want to lose. It also means you avoid any early repayment charges you might incur if you were to remortgage.
No Monthly Payments
Bridging loans don’t require any monthly repayments. The lender does charge you interest, and this is paid back along with the amount borrowed, before the loan term ends.
Unlock Your Property Equity
If you’ve built up equity in your property over time, a second charge bridging loan lets you tap into that equity without selling your property. It’s a way to make your property work for you, to get quick cash for other purposes.
Let’s Talk!
Common Uses
Bridging loans are the Swiss army knife of property finance.
They are incredibly flexible and can be used in so many different ways.
They are only designed to provide temporary funding. Some quick cash to get you out of a situation, or to secure an opportunity.
Here’s just a few ideas.
Property Renovation and Development
Maybe you want to add an extension to your home or perhaps you’re looking to convert a commercial property into residential units.
A second charge bridging loan can get you the funds to get started.
Business Cash Flow and Expansion
If you’re a business owner you might use a second charge bridging loan to inject some cash into your business.
This could be to cover a cash flow gap, fund a new project or seize a time sensitive business opportunity. It’s a way to use your property assets to support your business growth.
Auction Property Purchases
Auctions require quick payment, normally within 28 days.
A second charge bridging loan can get you moving fast to buy a property at auction even if you don’t have all the funds available.
Debt Consolidation
Some people use second charge bridging loans to consolidate other debts or prevent repossession.
If you’ve got yourself into a sticky situation a bridging loan can raise funds to settle other debts, while you secure a more suitable, long-term mortgage solution.
Who can apply for a second charge bridging loan?
Second charge bridging loans are available to a broad range of borrowers.
You could be an individual, a partnership, an SPV a limited company or even an offshore company.
The key is you own a property with enough equity to secure the loan against.
Here’s what lenders typically look for:
- You must be 18 years old or over.
- You must own a property in the UK (some lenders also cover properties in Europe).
- You have enough equity in your property to cover the loan amount.
- You need a clear exit strategy – that’s how you plan to repay the loan.
What about credit scores?
While a good credit score can help, bridging loan lenders are more flexible than traditional mortgage providers.
They’re more interested in the value of your property and your exit strategy than your credit history.
That said if you have serious credit issues it might be tougher to get approved.
We have access to lenders who will work on a non-status basis.
Read more: Do You Need a Good Credit Score for a Bridging Loan?
How much can you borrow?
The amount you can borrow with a second charge bridging loan depends on a few things.
The main one is how much equity you have in your property. Lenders work to a loan-to-value (LTV) ratio which includes your existing mortgage and the new loan.
Most lenders will lend up to 70% LTV.
How are these loans repaid?
When you apply for any bridging loan, you need to explain to the lender how you will pay them back.
This is known as your exit strategy.
You need to pay back the amount you borrowed, plus all of the interest, before the loan term ends.
For most people, the options are sale of the asset or long-term refinancing.
A common exit strategy is to sell the property. This works if you’re using the loan for a property you plan to renovate and sell on or if you’re looking to downsize.
With a second charge bridge, it might involve some alternative ways. Maybe using external capital or sale of other assets or investments.
The lender will carefully analyse your exit strategy, which needs to be in detail and plausible.
Impact on Existing Mortgage
A second charge loan doesn’t change your existing mortgage but it does increase the total debt secured against your property.
This increases the risk of repossession if you can’t keep up with the payments.
You will need to carry on making your regular mortgage payments.
When you apply for a second charge bridging loan, the lender needs permission from your existing mortgage company.
Having any kind of second charge loan will make remortgaging difficult (unless it’s being used to repay the bridge).
Why Choose Us?
We have access to over 250 lenders including specialist lenders and private banks.
We’re experts in complex cases. If your situation is a bit unusual we know how to help.
We work fast. We know time is of the essence with bridging finance so we get things moving asap.
We offer a bespoke service. We’ll take the time to understand your individual situation and needs and tailor our approach accordingly.
contact usFAQ
Yes. While there are similarities, second charge loans are very different to second charge bridging loans.
The main difference is that a secured loan is set up on a repayment basis over a long term, 10-25 years is common. People often use these for home improvements or debt consolidation.
Yes but may be more difficult. Lenders will look at your overall situation including the value of your property and your exit strategy.
Regulated loans are for owner occupied properties and are FCA regulated. Unregulated loans are for investment properties and have less rules.
In theory yes but it gets increasingly difficult and expensive. Each new charge increases the risk for lenders.
That’s perfect. You can use a standard first charge bridging loan to raise funds.
There are no restrictions on how you spend it.
Read more: What Can a Bridging Loan Be Used For?
Bridging lenders are well known for lending against almost any kind of property in any condition. Even those that would be deemed unmortgageable.
Read more: What is a Bridging Loan Secured Against?
Most problems occur when the main mortgage lender does not give permission to lodge the second charge. In some cases an equitable charge loan can be used instead, as this does not use a legal charge.
We have first charge lenders that will go as high as 90% LTV, for the right cases.
Second charge bridging loans are capped at 70%.
To borrow beyond 70% LTV would require other assets or property for the lender to secure against. So if you owned investment properties or commercial property, we have lenders that will take security over multiple properties using a cross charge.
On the other hand, if you have a substantial investment portfolio, a lombard loan can be used to raise money against the portfolio value, without having to sell shares.
