What is a second charge bridging loan?
A "charge" is the lender's legal claim over a property. The first charge belongs to the existing mortgage lender; a second charge bridge sits behind it and is repaid after it if the property is sold. The Personal Finance Society describes a second-charge loan as one taken against remaining equity, with a new lender sitting behind the first. For bridging basics, see our overview of bridging loans.
Why would an investor use one?
- To raise a deposit or funds for another purchase — for example an auction lot — quickly.
- To keep a good first mortgage in place rather than refinancing it.
- To fund works on another property, repaid when that project is refinanced or sold.
What does a second charge mean for cost and limits?
The second-charge lender is repaid after the first, so it carries more risk. Expect a lower maximum loan-to-value across both loans and a higher rate than a first-charge bridge. On regulated (owner-occupied) bridging, the PFS gives 75% LTV for a first charge and 70% for a second charge as general limits — investment lenders set their own.
Your existing mortgage terms may also require the first lender's consent before a second charge can be registered, so check your mortgage conditions early.
Is it regulated?
Not if the property is an investment or business property that neither you nor your close family live in or will live in (PFS). A second charge on your own home is regulated and isn't handled here — see regulated advice options.
How is it repaid?
Like any bridge, by an exit: selling one of the properties, refinancing, or another identified source. Model the cost over a realistic term in the bridging loan calculator.
Is bridging right for you?
Bridging is short-term borrowing secured on property, and the lender can take that property if the loan isn't repaid. Only use it with a realistic exit, and compare it with a standard buy-to-let or commercial mortgage first — if you have time to wait for one, it usually costs less. Speak to your accountant or solicitor if you're unsure.