Second Charge Bridging Loans
Already have a mortgage but require additional financing? We can help by offering a second charge bridging loan against the property.
We arrange 2nd charge bridging loans for Individuals, developers and investors to raise funds for many uses including loft conversions, extensions, renovation and refurbishment on properties that already have an outstanding mortgage.
Arrange a call with our experts today to get our best no obligation quote.
Second Charge Bridge Lending Criteria
|Loan to value (LTV)||Up to 65% maximum|
|Loan term||1 to 24 months|
|Loan amount||£26,000 up to £50m|
|Interest options||Rolled-up, retained or serviced|
|Interest rates||From 0.75%|
|Decision||Instant decision in principle|
|Early repayment fees||None|
|Availability||Secured on assets in UK & Europe
Individuals, Companies, SPVs
No credit & adverse credit considered
|Exit strategy||Sale or refinance|
Get expert assistance today, we're on hand to answer any questions about 2nd charge bridging loans.
To find out the exact costs of a Second Charge Bridging Loan get a quote online - it takes just 3 minutes!
Call our friendly team on 01202 612934, we look forward to speaking with you!
Are second charge mortgages regulated?
Second charge mortgages and bridging loans on residential property which is not your primary residential property and on commercial property are not regulated by the Financial Conduct Authority. For mixed-use property, whether it's regulated or not is assessed on a case by case basis.
How does taking out a second mortgage affect your current mortgage deal?
Whether you take out a second mortgage or a bridging loan, the provider of your first mortgage has to give permission.
In most cases, there's no problem.
The only time where a first mortgage lender may stop you taking out a second charge on property is if you're in arrears with them.
Do second charge bridging loans have competitive interest rates?
The rates of interest on second charge bridging loans will be higher than on a second charge mortgage if you are a prime borrower.
For borrowers with adverse or bad credit, interest rates will still be cheaper with a second mortgage than with a bridging loan although the gap won't be as large.
It's important to bear in mind though that second mortgages are amortised. This means that, although interest rates are lower, you pay much more in interest at the start of your mortgage on each repayment. You may not be paying your mortgage down as quickly as you think you are.
It's also worth remembering that you'll pay an early settlement charge if you pay off your second mortgage early or transfer it to another lender within your lock-in period. There are no redemption penalties on most bridging loans.
Both bridging loans and second charge mortgages are forms of secured loans.
Interest rates are cheaper on these types of loan because, if you can't pay it back, your lender has the option of reselling the property to recover what's owed to them.
Unsecured borrowing like unsecured personal loans and credit cards generally attract higher rates of interest.
The interest rate you'll pay on your bridging loan will depend on how viable your lender thinks your exit plan is.
Interest rates are fixed throughout the term of your bridging loan meaning that you won't pay more if the Bank of England puts up base rates.
How much can you borrow with a second charge secured loan?
The amount you can borrow depends on how much equity you have in the property you provide as security.
Equity is the difference between the value of your property and whatever's left to pay on your existing mortgage and any other secured loans you've taken out.
If you use a second charge bridging loan to raise money, you can borrow up to 65% of the value of the property.
So, for a property worth £300,000 where there is still £50,000 to pay on the mortgage, 65% of its value is £195,000. To work out how much you can borrow, you take away the mortgage owed (£50,000) from the value of the property (£195,000).
This means that, in this case, you can borrow up to £135,000 with a bridging loan.
What is an exit with a second charge bridging loan?
When you apply for a bridging loan, your lender will want to know how you'll pay them back.
Lenders call this your exit strategy.
Let's say that you want to take out a second charge loan on your property to renovate your commercial or mixed-use premises.
One exit might be to repay your bridging loan by taking out a brand new mortgage on your property.
What if you need a bridging loan to pay off an overdue tax or VAT bill because there's been a drop in sales in recent months?
Your exit might involve showing your lender how a return to normal sales volume will generate the cash needed to repay them.
Please get us touch with our team to discuss your exit strategy.
Are there early repayment charges on second mortgages?
Many second charge mortgage providers penalise borrowers a high early repayment charge if you pay off your facility early or switch to another second mortgage lender.
There are no early repayment fees on most bridging loans.
If we recommend an option to you which includes early repayment fees, we'll let you know but we try to avoid them.
Second mortgages, second charge bridging loans - paying them back
If you're successful in applying for a second charge mortgage, you'll now have two mortgages on the same property.
That means you'll be making two sets of monthly repayments.
You'll be paying your second mortgage back over a term of between 12 months and 30 years.
You don't make monthly repayment on most bridging loan unlike with second charge mortgages.
Instead, you repay what you borrowed plus the interest at the end of the loan in one tranche.
There are two types of second charge bridging loans - open and closed.
With a closed bridging loan, you agree to repay your lender back in full on an agreed date.
With an open bridging loan, you agree to make repayment in full at any time within the next 24 months.
How is applying for a second charge bridging loan different from a second charge mortgage?
With a second charge mortgage, you have to prove to your lender to prove you can afford the monthly repayments.
Doing this can be particularly difficult for the self-employed following the scrapping of the SA302.
Applying for a second mortgage is going to be even harder to get through if you have a bad credit rating.
All in all, it can take three months to get funding with a second charge mortgage secured against the residential, commercial or mixed-use property you own.
When you apply for second charge bridging loan, you get an immediate decision in principle from us and we can get the funding to you in around 10 working days.
Applying for a second charge bridging loan is a lot more straight forward. Although your credit rating is a factor, it's not as important to bridging loan providers as it is to mortgage lenders.