Loan amount:
£100k - £5m
Rate from:
0.89%
Loan-to-value:
up to 70%
Term length:
3 – 21 months
Overview
We can provide a second charge loan for any circumstance in which we could provide a first charge loan, across our range of products. Much like our first charge loans, our underwriting team assesses second charge requirements on a case-by-case basis by our underwriting team to find the best solution for the client.
Key information
What is a second charge bridging loan?
When you first lend against a property, with either traditional finance or alternative finance like a bridging loan, this is known as a 1st charge. If you require additional funding, we could provide a 2nd charge bridging loan to bridge the gap. A ‘second charge’ means that there are now two lenders with charges against the property.
Our second charge bridging loans are available to clients who live in the UK or overseas, except sanctioned states. However, all properties must be located within England and Wales. We also supply second charges for commercial assets and buy-to-let refurbishments or purchases.
An example of a second charge residential bridging loan:
A homeowner with an existing mortgage looking to raise funds to refurbish their home before putting the property on the market. They are currently still paying off their mortgage. A second charge bridging loan could be issued alongside the original form of finance. This would then provide the funds to renovate. To exit the loan, the buyer could use the sale of the property. They would first need to repay the first charge lender in full and then use the second charge lender once the sale completes.
What's the difference between a first charge and a second charge?
First charge
A first charge relates to the principal finance provided by a lender, which is the secured against a property before any other finance. By naming the lender the as the ‘first charge lender’, it means they will be the first to receive payment in the event of the sale of the building, they take precedence above any other charges on the same property.
Second charge
A second charge relates to the second lender who uses a property as security when providing a loan. This means that in the event of the sale of the property, the second lender (the ‘second charge’) will receive repayment once the first charge lender has first received a full repayment of their loan. This can put the second charge lender at a greater risk of not receiving a repayment in full, or at all. For this reason, second charges usually have a higher rate than first charges.
Can I place a second charge on my home of residency?
However, we still require an exit strategy for your short-term bridging loan. Failure to repay your bridging loan could lead to your home being repossessed. To mitigate against this, we will only supply our bespoke bridging finance once an exit strategy will soon be or is currently in place.
What are the key benefits for using second charge bridging loans?
1) Fast finance
If you’re in need of finance quickly, then a second charge could help. Mainstream finance and high street banks can take months to organise and release funds. A second charge can allow you to utilise your current asset now, without having to re-mortgage or change terms with your existing lender.
2) Securing finance for complex requirements
If you have complex circumstances, you may find it difficult to secure finance. Traditional lenders often have tick-box criteria to which they will need to adhere to. In comparison, our bridging loans are flexible, meaning we can tailor them to suit your financial situation.
3) Unlocking equity
If you would like to utilise equity in your property, but you’re locked into your current finance arrangement by an early repayment charge, then a second charge could be the solution. Using a second charge bridging loan means that the original first charge remains in place with no alteration. This gives you the financial freedom to utilise the extra funds raised for further property investments or other ventures, without incurring additional charges from your first lender.
When could I use a second charge loan?
- Generating capital to invest into another asset, either in full as a cash buyer, or to provide a deposit
- Raising funds to start refurbishment works on your property, or finish a project
- Raising finance to start a new business venture, or expand a current company
Will I need to consult my first charge lender to apply for a second charge?
Can I still apply for a second charge if I have bad credit / adverse credit?
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