Unlock Hidden Opportunities with Second Charge Bridging Loans

Think you know all about property finance? Think again.

Second charge bridging loans offer unique advantages that could transform your investment strategy.

As a property investor, you’ve probably used bridging loans quite a few times.

But have you considered second charge bridging loans? These can be a real lifesaver in certain situations when a first charge loan doesn’t quite fit.

Let’s look at 5 scenarios where a second charge bridging loan might be the answer. We’ll use real life examples and break it down why you might choose this over others.

Keeping Your First Mortgage Deal

You have a mortgage with an interest rate that your investor friends are green with envy.

You don’t want to lose that but you need some fast cash for a new opportunity. This is where a second charge bridging loan comes in.

Say you have a £500,000 mortgage for a property now worth £750,000. You’ve spotted a great off-market deal, but you need £100,000 for the deposit. A second charge bridging loan lets you borrow against your equity without touching that prime mortgage.

You’ll pay a higher rate on the bridging loan, but it’s short-term. More importantly, you keep your fab mortgage deal.

It’s the best of both worlds.

When Time is of the Essence

Sometimes, you need extra cash fast, but your existing lender is dragging their feet. This is where a second charge bridging loan can really shine.

Let’s say you’ve already got a mortgage on a buy-to-let property, but you’ve spotted an opportunity to significantly increase its value through renovations. Your current lender is taking ages to approve a further advance, and you’re worried the contractors could delay starting if you take too long.

A second charge bridging loan could provide the funds you need quickly, without disturbing your existing mortgage. While your main lender might take weeks or even months to approve additional borrowing, a bridging lender could potentially get you the extra funds in just a few days.

Let’s talk bridging loans!

Book your free consultation today and let’s discuss how we can help you achieve your property goals.

Filling the Gap in Complex Deals

Sometimes even with a healthy deposit you’ll find yourself short of funds for a purchase.

This often happens with high value or unusual properties where traditional lenders are more cautious.

A second charge bridging loan can top up your funding without touching your existing finance. It’s like an extra turbo boost to get you over the line.

For example you might be looking at a mixed use property – a building with shops on the ground floor and flats above. Your main lender will do 65% LTV but you need 75% to make the deal work. A second charge bridging loan can cover that extra 10% to make the purchase possible.

Avoiding Early Repayment Charges

Early repayment charges (ERCs) can be expensive.

If you’re stuck in a mortgage with ERCs you can’t get out of, a 2nd charge bridging loan can be a way to get extra funding without incurring those charges.

Let’s say you want to refurb a buy to let property to increase its rental value.

Your current mortgage has 2 years left on the fixed term with expensive ERCs. Instead of remortgaging and paying those charges you could use a second charge bridging loan to fund the refurb.

Yes the rate will be higher but if you’re planning to repay quickly (perhaps from the increased rental income) it could work out cheaper overall.

Your main mortgage stays the same and you avoid ERCs.

Cash Flow Across Your Portfolio

Property investment isn’t always plain sailing.

Sometimes you need financial flexibility to keep things running smoothly across multiple properties.

A second charge bridge loan can give you that flexibility. It’s like having a financial safety net you can deploy when you need it.

Imagine you have a portfolio of 5 rental properties.

Two of them need urgent repairs and double glazing – an unexpected expense that’s stretching your cash flow. A quick second charge loan against one of your higher value properties could give you the working capital to do the repairs and get them re-let quickly.

Second charge bridging loans can be very useful in the right circumstances.

They offer speed, flexibility and you can keep your existing mortgage arrangements in place. For smart investors they’re another tool in the box to get deals and manage your portfolio.

But let’s be clear – they’re not a one size fits all solution.

Second charge bridging has higher interest rates than first charge options. And like any form of borrowing they come with risks you need to consider carefully.

Before you go ahead, you need to have a clear exit strategy. How will you repay the loan?

Are you selling a property, refinancing or using rental income? Make sure your plans are realistic and have some wriggle room for delays.

It’s worth noting we’ve focused on property investment scenarios here but second charge bridging loans can be used for other purposes too.

Maybe you’re looking to invest in a business opportunity or you need to settle a tax bill quickly. The principles we’ve discussed apply to those situations too.

Need some help?

If you need a short-term bridging loan then a specialist broker is a good place to start. You will get expert help and advice along with a wide range of lenders to choose from.

To get matched with a specialist broker, please call us on 0330 030 5050.

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