Second Charge Bridging Loans

What is a second charge bridging loan?

A second charge bridging loan is a short-term loan secured against a property that already has a mortgage or another loan registered against it. Your existing lender keeps the first legal charge; the bridging lender registers a second charge behind them at HM Land Registry.

Because the second charge lender sits behind the first, they are repaid second if the property is ever sold or repossessed. That extra risk is reflected in the pricing, second charge bridging rates typically run slightly higher than an equivalent first charge loan, but for many borrowers the numbers still stack up comfortably, because:

• Your existing mortgage stays in place. If you’re sitting on a low fixed rate, remortgaging the whole debt at today’s rates to release a relatively small amount of equity rarely makes sense.
• There are no early repayment charges triggered on your first charge mortgage.
• Funds can be raised quickly, often faster than a remortgage or second mortgage, because bridging lenders underwrite against the asset and the exit, not lengthy affordability assessments.

The bridging loan and your mortgage run side by side, and the bridge is repaid at the end of its term through your chosen exit: typically a sale, a refinance, or the completion of a business event such as a development sale or invoice settlement.

Second charge bridging loan rates

Second charge bridging loan rates from lenders on our panel start from around 0.85% per month, depending on the strength of the case. As a rule of thumb, expect a second charge bridge to price around 0.10% – 0.30% per month above an equivalent first charge loan on the same property, that premium is the cost of the lender’s weaker security position.

The main factors that drive your rate are:

• Combined loan-to-value (CLTV). Lenders assess the first charge balance plus the new bridging loan against the property value. The lower the combined LTV, the sharper the rate. Most lenders cap combined exposure at 70%.
• The security property. As with first charge bridging, the underlying asset is important.
• The first charge lender and loan amount. Sitting at a low LTV behind a High Street mortgage lender will price lower than a large 1^st charge from a smaller specialist mortgage lender.
• Your exit strategy. A clear, evidenced exit, an agreed sale, a refinance decision in principle, a contracted receipt.
• Credit profile. Adverse credit is acceptable to many lenders on our panel, but clean credit widens the field and sharpens pricing.
• Ultra-fast private money completing in days costs more than a standard three-to-four week completion.

Because second charge appetite varies enormously between lenders, and many of the most competitive second charge lenders only work through intermediaries, the difference between the best and worst quote for the same case can be significant. This is exactly where a specialist broker earns their keep: we know which lenders genuinely want second charge business this month, and we negotiate hard on your behalf.

Estimate your costs with our bridging loan calculator

Want a quick idea of what a second charge bridging loan will cost? Our bridging loan calculator gives you an estimate of interest, fees and total repayment in around 30 seconds. Enter your loan amount, term and estimated rate and a quote is displayed instantly, then give us a call and we can talk through the numbers in more detail, including how the combined LTV across your existing mortgage and the new loan affects your pricing.

When is a second charge bridging loan the right tool?

Property investors, developers and business owners use second charge bridging finance when they need capital fast and their equity is tied up in mortgaged property. Common scenarios include:

• Raising a deposit for the next purchase: Including auction purchases with a 28-day completion deadline.
• Funding refurbishment works on an existing property before sale or refinance.
• Injecting working capital into a business: Stock purchases, tax bills, cash flow gaps or one-off opportunities.
• Completing a development where the original facility has run out and additional funds are needed to finish and exit.
• Buying out a partner or shareholder where speed matters.

If your existing mortgage is on a competitive rate, or carries heavy early repayment charges, a second charge bridge lets you get at your equity without disturbing it.

First charge vs second charge bridging: What’s the difference?

If you own the property outright, a first charge bridge will almost always be cheaper and simpler. But where a mortgage is already in place and you want to keep it, the second charge route is usually the more cost-effective way to release equity.

What about first charge lender consent?

In most cases, your existing mortgage lender must give consent before a second charge can be registered against the property. Some high street lenders grant this routinely; others are slow or refuse as a matter of policy.

This is a detail that catches out borrowers who go direct, and it’s one we deal with every week. We confirm the consent position at the very start of the process, and where consent is refused or would take too long, lenders on our panel can offer equitable charge structures, which secure the loan without requiring the first lender’s permission. It’s a specialist corner of the market, and knowing which lenders will run with an equitable charge, and at what price, is precisely the kind of granular knowledge you won’t find with a Google search.

How the process works

• Contact us: Tell us about your property, your existing mortgage balance and what you need the funds for.
• We source quotes just for you: With second charge products available from across our panel of 300+ lenders, we identify the lenders with genuine appetite for your case and negotiate terms.
• Select your lender: We complete the application and supporting documents for you, and confirm the first charge consent position early.
• We handle the deal: From valuation through legals to completion, we actively manage the file, influence the underwriters and look ahead for problems so your funds land on time.