What Is a Second Charge Bridging Loan?
A **second charge bridging loan** is a short-term secured loan that sits behind an existing first charge mortgage on a property. Instead of replacing your current mortgage, the bridge takes a subordinate position — meaning if the property were sold, the first charge lender gets repaid first, and the second charge lender is repaid from the remaining equity.
Second charge bridging **enables** property owners to access equity locked in their existing assets without disturbing their current mortgage arrangements. This is particularly valuable when your first charge mortgage has favourable terms that you do not want to lose, or when remortgaging would take too long.
How Second Charge Bridges Differ From First Charge
Understanding the distinction is important because it affects rates, LTV, and lender availability.
First Charge Bridging
- The bridging loan is the only charge on the property
- No existing mortgage in place
- Lower risk for the lender (they are first in line if the property is sold)
- Better rates: Typically 0.45% to 0.95% per month
- Higher LTV: Up to 75%
Second Charge Bridging
- The bridging loan sits behind an existing first charge mortgage
- The first charge lender must consent (or be notified, depending on their terms)
- Higher risk for the lender (they are second in line)
- Higher rates: Typically 0.75% to 1.50% per month
- Lower combined LTV: The first charge mortgage plus the bridge typically cannot exceed 70-75% of the property value
The Combined LTV Calculation
This is the critical figure. Here is how it works:
- Property value: £800,000
- Existing first charge mortgage: £400,000 (50% LTV)
- Maximum combined LTV: 70% = £560,000
- Available for second charge bridge: £560,000 - £400,000 = £160,000
The more equity you have above your first charge mortgage, the more you can borrow on a second charge bridge.
**Key Takeaway:** Your available borrowing on a second charge bridge is determined by the gap between your existing mortgage balance and the maximum combined LTV the lender will accept. More equity means more borrowing capacity.
When to Use a Second Charge Bridge
Second charge bridging is not always the right choice, but in certain situations it is the most practical and cost-effective option.
Preserving Favourable Mortgage Terms
If your existing commercial mortgage has a low fixed rate, favourable terms, or would attract significant early repayment charges (ERCs) if redeemed, a second charge bridge avoids these costs.
For example, if your mortgage has a 3% ERC on a £500,000 balance, redeeming it to take a first charge bridge would cost £15,000 in penalties alone. A second charge bridge avoids this entirely.
Raising Capital Quickly
Remortgaging your existing property to release equity takes 6 to 12 weeks. A second charge bridge can complete in 5 to 14 days, giving you fast access to funds when time is critical.
Funding a Deposit for a New Purchase
One of the most common uses. You need a deposit for a new commercial property but your cash is tied up in equity. A second charge bridge against your existing property provides the deposit, while a separate first charge mortgage (or another bridge) funds the new purchase.
Chain Break Finance
When you need to complete a purchase but your property sale has not yet completed, a second charge bridge releases equity from your existing property to fund the new purchase. See our detailed guide on [chain break bridging](/knowledge-hub/bridging-loans-chain-breaks-commercial).
Business Cash Flow
Commercial property owners sometimes use second charge bridges to inject working capital into their business during a temporary cash flow shortage, with the intention of repaying from business income or a longer-term refinance.
Tax Payment or Legal Settlement
Urgent financial obligations that cannot wait for a remortgage can be met through a second charge bridge.
The Consent Process
Before a second charge bridge can be put in place, your existing first charge lender must either **consent** to the additional charge or at minimum be **notified**.
Why Consent Is Needed
Most mortgage terms include a clause preventing additional charges on the property without the lender's permission. This protects the first charge lender's security.
How Long Consent Takes
This is often the biggest variable in second charge bridging timescales:
- Some lenders consent within 24-48 hours — particularly specialist and commercial lenders who process these regularly
- High street banks may take 2-4 weeks — or longer if the request goes to a centralised team
- Some lenders refuse consent entirely — in which case a second charge bridge is not possible without redeeming the first charge
Your broker should check your first charge lender's consent process before submitting the second charge application. This avoids wasted time and fees if consent is unlikely to be granted.
Deed of Priority
When the first charge lender consents, a **deed of priority** is signed confirming the ranking of charges. The first charge retains priority, and the second charge lender accepts the subordinate position.
**Key Takeaway:** The consent process can be the longest part of arranging a second charge bridge. Ask your broker to check your first charge lender's policy early in the process.
Costs of Second Charge Bridging
Second charge bridges are more expensive than first charge due to the increased risk for the lender. Here is a typical cost structure:
Interest Rates
- Range: 0.75% to 1.50% per month
- Typical: 0.95% to 1.15% per month for standard commercial property
- Factors affecting rate: Combined LTV, property type, exit strategy, borrower profile
Fees
- Arrangement fee: 1.5% to 2.5% of the loan amount (higher than first charge)
- Valuation fee: £500 to £2,000 depending on property value
- Legal fees: £1,500 to £3,500 (your solicitor and the lender's)
- Exit fee: 0% to 1.5% (not all lenders charge this)
- First charge lender consent fee: Some first charge lenders charge £100 to £500 for processing the consent
Worked Example
- Property value: £600,000
- Existing first charge: £300,000
- Second charge bridge: £100,000 (combined LTV: 67%)
- Monthly rate: 1.0%
- Term: 6 months
- Arrangement fee: 2% = £2,000
- Interest: £100,000 x 1.0% x 6 = £6,000
- Valuation and legal: £3,000
- Total cost: £11,000
For access to £100,000 in 7-14 days without disturbing your existing mortgage, this can be highly cost-effective compared to the alternatives.
Lenders Active in Second Charge Bridging
Not all bridging lenders offer second charge products. Those that do include:
- Shawbrook: Well-established in second charge commercial bridging
- Hampshire Trust Bank: Flexible on second charge structures
- Interbay Commercial: Offers second charge bridges alongside their first charge products
- Aldermore: Considers second charge for commercial and semi-commercial property
- Redwood: Specialist in complex second charge scenarios
Your broker will identify which lender best suits your property type, LTV, and exit strategy.
Second Charge vs Remortgage: Which Is Better?
The choice between a second charge bridge and remortgaging your property depends on several factors:
Choose a Second Charge Bridge When:
- Speed is essential: You need funds in days, not weeks
- Your existing mortgage has favourable terms: Low rate, no ERCs, or terms you want to preserve
- The borrowing is short-term: You will repay within 3 to 12 months
- Your first charge lender consents quickly: Some lenders make this straightforward
Choose to Remortgage When:
- You have time: 6 to 12 weeks is acceptable
- You want to borrow for the long term: A new first charge mortgage at a lower rate is cheaper over time
- Your existing mortgage is on poor terms: Remortgaging to a better deal makes sense regardless
- The amount you need exceeds second charge limits: First charge mortgages generally offer higher LTVs
Choose to Redeem and Take a First Charge Bridge When:
- Your first charge lender will not consent to a second charge
- The combined LTV on a second charge is insufficient for your needs
- You are planning to refinance the entire property in the near term anyway
Risks and How to Manage Them
Over-Leveraging
With both a first charge mortgage and a second charge bridge, your total debt is higher. Ensure you can service both — or at least the mortgage — while the bridge is in place.
Consent Delays
If your first charge lender takes weeks to consent, your timeline may be compromised. Mitigate this by checking consent timescales before committing to any purchase that depends on the second charge funds.
Exit Strategy Failure
If your exit strategy fails and you cannot repay the second charge, the second charge lender may seek repossession. This would require repaying the first charge as well, putting your entire equity at risk.
Interest Cost Accumulation
Second charge rates are higher than first charge. If the bridge runs longer than expected, costs escalate quickly. Always budget for a longer term than you expect to need.
**Key Takeaway:** Second charge bridging is a powerful tool, but it increases your overall leverage. Only borrow what you need, ensure your exit is solid, and maintain cash reserves for contingencies.
How to Apply
The application process for a second charge bridge follows the same steps as a standard [bridging loan application](/knowledge-hub/how-to-apply-commercial-bridging-loan), with the additional requirement of:
- Providing details of your existing first charge mortgage: Lender name, balance, monthly payment, remaining term, and any ERCs
- Confirming the consent process: Your broker will contact the first charge lender to understand their requirements and timeline
- Demonstrating combined affordability: Showing you can meet both the first charge mortgage payments and the bridging costs
[Contact Commercial Mortgages Broker](/contact) to discuss whether a second charge bridge is the right solution for your situation.
Frequently Asked Questions
Do I need my existing lender's permission for a second charge bridge?
In most cases, yes. Your first charge mortgage terms almost certainly require lender consent before a second charge can be registered. Some lenders are quick and cooperative, while others take longer or may refuse.
How much can I borrow on a second charge bridge?
The amount depends on the equity available above your existing mortgage. Most second charge bridging lenders work to a combined LTV of 65-75%, meaning your first charge mortgage plus the bridge cannot exceed this percentage of the property value.
Are second charge bridges more expensive than first charge?
Yes. Second charge bridges carry higher rates (typically 0.75% to 1.50% per month compared to 0.45% to 0.95% for first charge) and higher arrangement fees, reflecting the increased risk for the lender.
Can I have a second charge bridge on a residential property?
Yes, but if the property is your main home, the loan will be regulated by the FCA. Regulated second charge bridges have additional consumer protections and a more involved application process.
What if my first charge lender refuses consent?
If consent is refused, your options are to redeem the first charge and take a first charge bridge instead, or to use a different property as security. Your broker can advise on the most cost-effective approach.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*