Need to raise funds fast? Bridging finance could be the solution—and yes, it can be secured as a second charge loan. Read on to discover everything you need to know.
Are second charge bridging loans available?
Yes, a bridging loan can be secured as a second charge against a property you own and have equity in. This type of loan sits behind the primary debt—typically your mortgage—meaning it’s repaid only after the first charge in the event of a sale or repossession.
There are two main types of second charge bridging finance:
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Unregulated – Used when no residential property is involved. For example, the loan is secured against a commercial asset as secondary to existing long-term finance, such as a commercial mortgage.
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Regulated – Applies when a residential property is involved. This could mean the loan is secured against your primary home (behind the mortgage), or the funds are being used to purchase a property that you or a close family member intends to live in once the transaction completes.
Second charge bridging loans can be arranged quickly and offer flexible eligibility criteria. However, it’s important to note that interest rates are typically higher than standard lending—and there is a real risk of losing the property used as security if the loan isn’t repaid on time.
How does this type of finance work?
Second charge bridging loans operate in much the same way as first charge bridging finance, with the key difference being that the debt is secured behind an existing loan—typically a mortgage. This means the bridging lender is second in line to be repaid if the security asset is repossessed and sold due to non-payment.
As with all bridging finance, second charge loans are typically short-term and interest-only. To gain approval, you’ll need to provide a clear and credible exit strategy—such as refinancing or the sale of the property.
If the loan is being used for a property investment or purchase, the most common exit strategies are to either sell the property or refinance onto a standard residential or commercial mortgage once the bridging term ends.
Criteria for second charge bridging
To qualify for a second charge bridging loan, lenders will assess several key factors:
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Lender Consent
Your first charge lender must consent to a second charge being registered against the property. This is essential, as repossession due to non-payment could impact their position and recovery of funds. -
Exit Strategy
This is the most critical element of your application. Lenders need to see a clear and credible plan for repaying the loan—typically through refinancing onto a longer-term mortgage or selling the property at the end of the term. -
Deposit Requirements
Second charge bridging loans can come with higher deposit demands than first charge loans. Some lenders may require up to 40% of the loan amount as a deposit, though others may accept as little as 20–25%. -
Credit History
While bridging finance—especially unregulated loans—can be more flexible when it comes to credit history, adverse credit could still be an issue if it casts doubt on your ability to execute the exit strategy successfully.
Each lender will have their own approach, so working with a specialist broker can help you find a solution that aligns with your circumstances.
Regulated second charge bridging loans are subject to stricter criteria, as lenders must comply with the guidelines set out by the Financial Conduct Authority (FCA). This added layer of regulation is designed to protect borrowers, but it also means the approval process may involve more thorough affordability checks and documentation.
How to get a second charge bridging loan
1. Speak to a specialist broker
Second charge bridging loans can be complex and carry a higher level of risk, so it’s essential to seek expert advice from the outset. There are brokers who specialise in this area and can provide tailored guidance to suit your circumstances.
2. Obtain consent from your existing lender
Before applying, you’ll need approval from your current lender to register a second charge against the property. Your broker can help you navigate this process and assess the likelihood of consent being granted.
3. Prepare your exit strategy
Lenders will require a clear and realistic plan for repaying the loan. Whether it's through a remortgage or property sale, you’ll need to provide evidence to support your chosen exit route.
Your broker will guide you through each of these steps and manage your full application to ensure everything runs as smoothly as possible.
How much can you borrow?
Most bridging lenders offering second charge finance will allow you to borrow between 40% and 80% of the value of the property or asset being used as security. However, it may be possible to borrow more if you can offer additional assets as collateral.
It's also important to note that many lenders set a maximum loan amount. For some, this cap may be in the region of £2–3 million, while others have no upper limit and will consider larger loans on a case-by-case basis, depending on the strength of the application and the security offered.
Available lenders and rates
Lenders who consider second charge bridging finance applications include:
- Glenhawk
- MT Finance
- MercantileTrust
- Octane Capital
Most lenders in the second charge bridging market are specialist and unregulated, focusing on bespoke, case-by-case lending. Our bridging finance brokers have established strong relationships with many of these lenders, giving us access to exclusive rates and deals—even for regulated second charge bridging loans.
It’s worth noting that interest rates for second charge bridging are typically higher than those for first charge loans. However, you can improve your chances of securing a more competitive rate by:
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Offering a larger deposit or additional security
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Presenting a clear, credible, and well-documented exit strategy
Working with a broker ensures your application is positioned as strongly as possible from the outset.
Frequently Asked Questions
Yes provided you hold enough equity in the security asset, there are a few lenders available for third charge bridging loans. This works similarly to second charge bridging, except the lender would be third in line to recoup their losses in the event of a repossession.
Rates and deposit requirements for third charge bridging are generally higher than first and second charge, and the criteria can be more stringent.