Second charge bridging loans
A second charge bridging loan is short-term finance secured against a property that already has a mortgage on it. The existing lender keeps its first charge, the bridging lender sits behind it, and you raise capital from your equity without disturbing the mortgage you already have. FD Commercial arranges second charge bridging loans from £250,000 across the UK.
What is a second charge bridging loan?
Every mortgage is registered as a charge against the property at the Land Registry, and charges rank in order. The first charge lender gets repaid first on any sale; a second charge lender ranks behind them. A second charge bridging loan uses that structure to raise short-term capital against equity in a property that already carries a mortgage, without repaying or renegotiating the existing facility.
The point of the product is what it leaves alone. If your existing mortgage is fixed at a rate written two or three years ago, remortgaging to raise capital means giving up that rate and probably paying an early repayment charge for the privilege. A second charge bridge prices only the new money. The existing debt stays exactly where it is.
When does a second charge bridge make sense?
The arithmetic favours a second charge whenever the blended cost of keeping your existing mortgage and adding bridging on top is lower than the cost of refinancing everything at today's rates plus the ERC. For borrowers holding fixed rates agreed before rates rose, that is often the case even at bridging pricing, because the bridge only runs for months rather than years.
The situations we arrange most often: raising a deposit or full purchase funds for the next property while equity is tied up in the current one, a fast cash injection into a trading business, settling tax liabilities including VAT, corporation tax and inheritance tax where HMRC deadlines will not wait for a term refinance, completing a refurbishment that has run over budget, and buying out a partner or shareholder. In each case the lender wants two things: a coherent purpose and a credible exit.
A second charge is also the practical route when your existing lender simply declines further advances. Plenty of banks are happy holding their existing loan but have no appetite to increase exposure. Their consent to a second charge is a far smaller ask than a further advance.
How much can you borrow on a second charge?
Lenders assess a combined LTV: the first charge balance plus the new bridge, measured against the property value. Most second charge bridging sits at a maximum combined LTV of 70%, with the sharpest pricing below 60%.
| Property Value | First Charge Balance | Combined LTV Cap (70%) | Maximum Second Charge |
|---|---|---|---|
| £1,000,000 | £400,000 | £700,000 | £300,000 |
| £2,000,000 | £900,000 | £1,400,000 | £500,000 |
| £5,000,000 | £2,000,000 | £3,500,000 | £1,500,000 |
Interest is usually rolled up rather than serviced monthly, so the lender will deduct the retained interest from the gross advance when calculating what lands in your account. On commercial security, combined LTVs typically run slightly lower than residential.
What are second charge bridging rates?
Second charge money costs more than first charge money because the lender's security ranks behind the existing mortgage: if the property sells at a loss, the second charge lender absorbs it first. Indicative rates run from 0.85% to 1.25% per month, against roughly 0.55% to 0.95% for equivalent first charge bridging. Combined LTV is the biggest pricing driver, followed by asset quality and the strength of the exit.
Costs beyond the rate follow the standard bridging pattern: a lender arrangement fee of around 2%, a valuation fee, legal costs for both sides, and where a legal charge is registered, the first charge lender's consent fee. Our bridging costs and fees guide breaks down the full cost stack with worked examples, and the bridging loan calculator will model your numbers.
Does the first charge lender have to consent?
To register a legal second charge, usually yes. Most mortgage terms require the borrower to obtain consent before granting further charges, and the second charge lender will want a deed of priority or consent letter confirming where they stand. High street lenders grant consent routinely but not quickly; two to three weeks is common, and it is frequently the longest single step in the transaction.
Where consent is slow, refused, or the timescale kills the deal, some lenders will complete on an equitable charge instead: a charge over your beneficial interest that does not require the first lender's consent. The trade-off is a lower LTV or higher rate, because the lender's enforcement position is weaker. It is a legitimate structure used regularly on time-critical transactions, and we will tell you honestly when it is the right tool and when it is an expensive shortcut.
Regulated or unregulated?
The line is the same as all bridging. A second charge secured on the home you live in is a regulated agreement: FCA rules apply, the maximum term is 12 months, and affordability and advice requirements are stricter. A second charge secured on investment property, commercial property, or a company-owned asset is unregulated, with terms typically up to 18 months and more structural flexibility. FD Commercial arranges both, and the distinction shapes lender choice from the first call. Our guide to regulated vs unregulated bridging covers the differences in full.
A property investor held a £1.8 million semi-commercial building with £700,000 outstanding on a five-year fixed rate at 5.4%, three years left to run and an ERC of 3%. A neighbouring unit came to market at £550,000 with a motivated seller and a four-week deadline. Remortgaging to raise the funds meant a £21,000 ERC and repricing £700,000 of cheap debt.
We arranged a £560,000 second charge bridge at 0.95% per month (indicative) on a 12-month term, combined LTV 70%, interest rolled up. The first charge lender's consent came through in 11 working days and the purchase completed inside the deadline.
The exit was a single refinance of both properties onto one commercial investment facility once the new unit was let, timed for after the fixed rate's ERC stepped down. The bridge cost roughly £64,000 in rolled interest and fees; breaking the fix and refinancing everything at current rates would have cost more over the same period and lost the purchase.
Process steps
You tell us the property, the first charge balance and rate, how much you need and what for. We confirm whether a second charge beats the alternatives, including a further advance or full refinance.
We establish early whether your first charge lender grants consent and on what timescale, because it drives the structure. If consent will not work, we scope the equitable charge route before terms are agreed.
We match the case to second charge lenders with appetite for your asset type, combined LTV and exit, and secure indicative terms.
The lender instructs a valuation, or a desktop where speed demands and the asset suits. Underwriting focuses on the exit and the combined LTV.
Solicitors deal with the charge registration and any deed of priority with the first lender. Funds are released on completion, typically 1 to 3 weeks from the initial call.
If the equity is in the property and the deadline will not wait for a remortgage, a second charge is usually the answer.
Call 03300 100315Frequently asked questions
What is a second charge bridging loan?
Short-term finance secured against a property that already has a mortgage. The existing lender keeps the first charge, the bridging lender registers a second charge behind it, and you raise capital from the equity without disturbing the existing mortgage.
Why use a second charge bridge instead of remortgaging?
Because it leaves the first charge untouched. If your existing mortgage is on a low fixed rate, carries early repayment charges, or your lender will not advance more, a second charge raises the capital without repricing the debt you already have.
What LTV can I get on a second charge bridging loan?
Lenders work to a combined LTV across both charges, typically up to 70% of the property value. A £2 million property with £900,000 outstanding could support a second charge of up to around £500,000.
What are second charge bridging loan rates?
Indicative rates run from around 0.85% to 1.25% per month, higher than first charge bridging because the lender ranks behind the existing mortgage. Combined LTV, asset quality and exit strength drive the pricing.
Do I need my mortgage lender's consent?
Usually, yes, for a legal second charge. Consent typically takes two to three weeks from high street lenders. Where consent is slow or refused, some lenders proceed on an equitable charge at a lower LTV or higher rate.
How fast can a second charge bridging loan complete?
Typically 1 to 3 weeks. First charge lender consent is the main variable. Equitable charge structures can complete faster where consent is the bottleneck.
Are second charge bridging loans regulated?
Secured on your own home, yes: FCA rules apply and the maximum term is 12 months. Secured on investment or commercial property the loan is unregulated, with terms typically up to 18 months. We arrange both.
What can a second charge bridging loan be used for?
Deposits or full funds for the next purchase, business cash injections, tax liabilities including VAT and inheritance tax, completing refurbishments, and partner or shareholder buyouts. Lenders want a coherent purpose and a credible exit.
What exits do lenders accept?
Sale of the security property or another asset, refinance of both charges onto a single new facility, or a defined incoming receipt such as a completion, business proceeds or probate distribution. The exit is the core of the underwriting.
Can I get a second charge bridge on a commercial property?
Yes. Second charges can be secured on commercial, semi-commercial and investment residential property, and on your own home for regulated cases. Combined LTVs on commercial security run slightly lower than residential.
What does a second charge bridging loan cost?
Beyond monthly interest: a lender arrangement fee of around 2%, a valuation fee, legal costs for both sides, and where applicable the first charge lender's consent fee. The costs guide linked above sets out the full stack with worked examples.
Does FD Commercial charge broker fees on second charge bridging?
Yes. FD Commercial charges a broker fee of up to 1% of the loan amount. This is disclosed at the outset in our fee schedule.