Second Charge Bridging Loans

You can borrow between £100,000 and £5,000,000, depending on your project.

You can use second charge bridging finance to support a range of property plans. They can be used to refurbish a home before putting it back on the market. The capital can be used to invest in another property or finance a business venture. If you want to convert a property you can also utilise 2^nd charge funding. This will be the case whether you want to transform a commercial building into flats, or utilise an empty home to expand into a new industry.

You can use our second charge bridging finance to invest in residential, semi-commercial, or commercial properties. They can also be charged against your home of residence. For commercial properties, this can range between office blocks through to care homes. Residential assets could come in the form of new-build houses, HMOs and more.

Are second charge bridging loans regulated?

Bridging loans, regardless of whether they’re first or second charge, can be regulated or unregulated. Regulated bridging loans are typically used by homeowners who find themselves falling short of funds.

Unregulated loans are used for investment properties only, and are often utilised by intermediaries, developers, and landlords to bridge a payment gap quickly.

At MFS, we only offer unregulated second charge bridging loans. They tend to be more flexible and speedier than their regulated counterparts. Unregulated second charge bridging loans can be used for a range of plans – including refurbishments or expanding a portfolio.

Second charge bridging loans can allow you to raise funding quickly where mainstream finance lenders struggle to adapt. High street banks can take months to release funds from existing assets, while rising costs may make their criteria especially strict. Our 2nd charge bridging loan is flexible, tailored to your circumstances and won’t interfere with your 1^st charge loan, providing the initial lender agrees to the 2^nd charge being placed on the asset.

So long as you’re aged between 21 and 85, you can qualify for a 2nd charge bridging loan. Our funding can be issued to a broad range of investors and circumstances. Regardless of whether you’re facing broken chains or tight deadlines, we’ll be able to adapt.

We’re open to applications from individuals as well as corporate set ups. This includes limited companies, LLPs and SPVs. We can also lend to overseas property investors, so long as they’re not based in a sanctioned or blacklisted country.

You can also apply if you have an adverse credit history. We look at the whole picture and take you and your property into consideration on individual merit. If you have adverse credit, we can still provide a second charge, depending on your property, your circumstances, and your exit strategy.

How much interest is paid on second charge bridging loans?

The interest paid on second charge bridging loans will be affected by a range of factors. This includes your specific LTV, financial circumstances and more. Your assigned underwriter will break down your applicable interest rate.

We have a range of repayment options available to allow you to cover your loan repayments. This includes serviced monthly, fully retained, and part retained and serviced monthly options.

Also, beyond the 3-month mark, we have no early repayment charges on our bridging loans. Regardless of whether you need a second charge bridge loan for 4 months, 12 months, or 21 months, all our fees will be laid out from day 1 of your application.

Across all our bridging products, cases are underwritten from day 1. This means you’ll never be hit by unexpected costs. All our loans have an arrangement fee, starting from 1% of the gross loan amount. There are no admin fees and commitment fees are refunded on drawdown. For second charge bridging loans, we may have exit fees, though they will be discussed with you on application.

Our funding can be delivered in 3 days but on average, most of our cases complete in around 2 weeks. Complications may slow down the process, but we’ll adapt on an ongoing basis. No matter what challenges are thrown our way, we’ll push to issue your funding as quickly as possible.

First charge finance

A first charge relates to the principal finance provided by a lender, which is secured against a property before any other finance. Naming the lender as the ‘first charge’ 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 bridging loan

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 settle their loan once the first charge lender receives their repayment. 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 interest rate.

Your first charge lender will need to provide permission for you to commence with your second charge bridging finance. The solicitors working on the case will consult with your first charge lender to gain the permission and allow us to find a solution that works for all parties involved.

Whilst we are an unregulated lender and therefore cannot supply first charge bridging loans on homes of residency, we can accept your residence as security for a second charge bridging loan.

However, we still require an exit strategy for your second charge bridging finance. Failure to repay your loan could lead to your home being repossessed. To mitigate against this, we will only supply our bespoke finance once an exit strategy is agreed or is currently in place.

Can I remortgage to pay off a 2nd charge bridging loan?

Yes, it is possible to remortgage a property to cover a 2nd charge bridging loan. You can remortgage onto a long-term financial product with a new lender – seeking out the best terms possible. This may allow you to then consolidate your first and second charge loans through remortgaging. If you have 2 charges on a property, including one of our bridging products, you may be able to remortgage internally with us onto our BTL mortgage product.

Please note, it will not be possible to remortgage onto our BTL range with only the second charge loan. Every charge involved will need to be consolidated.

Could I have several second charge bridging loans at the same time?

Yes, although multiple second charges will be spread across properties. It’s not possible to have more than one 2nd charge bridging loan on a single property. If you’re applying for another charge on a property which already has a second charge on it, your new application will be for a third charge loan.

This will then continue with a fourth charge, fifth charge etc. While it may be difficult to pull off in reality, it is possible to secure an unlimited number of charges on a property, so long as your circumstances allow for it.

Your application will require the specific details unique to your circumstance. At a minimum, we’ll need information and documentation on the investment itself and exit strategy. For our second charge bridging loans, we’ll also need details on the 1^st charge lender.

To get the ball rolling on your finance requirement, you can call us directly on +44 (0) 20 7060 1234. We can also be emailed through this address: info@mfsuk.com. Your enquiry will be responded to within 4 hours by a dedicated underwriter.