Second Charge Bridging Loans

Key Takeaways

• A second charge bridging loan is simply a bridging loan that’s secured against a property already under a first charge, such as a standard mortgage.
• It provides short-term funding for various needs, like purchasing a property or covering renovation costs.
• Bridging Finance offers tailored solutions, competitive rates, and expert guidance to navigate the complexities of second charge bridging loans – and, we don’t charge a fee.

What Is a Second Charge Bridging Loan?

A second charge bridging loan is a short-term financial product secured against a property already subject to a first charge, usually a standard mortgage.

The “second charge” refers to the lender’s position in the repayment hierarchy, meaning the first-charge lender has priority if the property is sold or repossessed.

This type of loan is often used to quickly access funds without disturbing the first charge arrangement, making it a flexible solution for urgent financing needs.

How a Second Charge Bridging Loan Works

A second charge bridging loan works similarly to a first charge bridging loan but is structured to account for the existing mortgage. Here’s a step-by-step breakdown:

1. Evaluate Loan Security
   The loan is secured against your property, which must have sufficient equity to cover both the first and second charges. You can use our bridging calculator below to get an idea of whether you’re eligible.
2. Determine Loan-to-Value (LTV)
   Lenders typically offer up to 75%-80% combined LTV (including the existing mortgage and the bridging loan).
3. Exit Strategy
   You’ll need a clear plan to repay the loan, such as selling a property or refinancing.
4. Apply Through a Broker
   Brokers streamline the application process, help find competitive rates, and manage the complexities of securing a second charge loan. Some are fee-free, like us at Bridging Finance.
5. Receive Funds Quickly
   Funds are often available in as little as 72 hours once approved.

Try our second charge bridging calculator below.

When Is a Second Charge Bridging Loan Suitable?

A second charge bridging loan is ideal for scenarios where you need quick access to capital without affecting your existing mortgage. Common use cases include:

• Buying Property Before Selling Another
  Secure funds to purchase a new home while waiting for your current one to sell.
• Funding Renovations or Repairs
  Use the loan for refurbishment projects, particularly on properties that are unmortgageable due to their condition.
• Business or Personal Needs
  Cover unexpected expenses or invest in business opportunities without refinancing your primary mortgage.

Benefits of a Second Charge Bridging Loan

Flexibility

Second charge loans allow you to borrow without affecting your first charge mortgage, maintaining existing terms and rates.

Speed

Applications are processed quickly, often within days, enabling fast access to funds when time is critical.

Tailored Solutions

At Bridging Finance, we offer customised loan structures to meet your specific needs, whether for property purchases, renovations, or debt consolidation.

Costs and Considerations

Interest Rates

Interest rates for second charge bridging loans typically range between 0.65% and 1.5% per month, depending on the LTV and loan amount.

Fees

• Facility Fee: 1.5%-2% of the loan amount.
• Valuation Fees: Approximately £950, depending on the property value.
• Legal Fees: £1,000 on average, though joint representation can reduce costs.
• Redemption Fees: £100-£150 for closing the loan.

Risks

Your property is at risk if you fail to repay. This makes having a sound exit strategy essential.

Why Choose Bridging Finance?

At Bridging Finance, we specialise in connecting clients with the right second charge bridging loan solutions. Here’s what sets us apart:

1. Expert Advice
   We provide clear, honest guidance tailored to your financial situation and objectives.
2. Competitive Rates
   With access to a wide network of specialist lenders, we secure competitive rates and terms.
3. No Broker Fees
   Unlike many brokers, we don’t charge clients for our services, saving you hundreds of pounds.
4. Streamlined Process
   From application to funding, we handle all the paperwork and keep you updated every step of the way.

FAQs About Second Charge Bridging Loans

How is a second charge bridging loan different from a first charge loan?

A second charge loan is secured against a property with an existing first charge, whereas a first charge loan takes primary priority in repayment.

What is the maximum LTV for a second charge bridging loan?

Most lenders offer up to 75%-80% combined LTV, considering the first charge mortgage and the new loan.

Do I need a high income to qualify?

No, second charge loans are based on the property’s equity and your exit strategy rather than income.

How quickly can I access funds?

Funds can often be released within 72 hours after approval.

Can I repay early?

Yes, most bridging loans, including those we arrange, allow early repayment without penalties, reducing your overall costs.

Get Started Today

Contact us today for a free consultation and quote. With our expertise, you’ll secure the funding you need quickly and efficiently.