Second charge bridging loans provide borrowers with near immediate access to the equity they’ve built up in the property or properties they own.
You can use the money raised with a second charge bridging loan for funding for the purchase of additional property or land to start or expand your portfolio. If you have an urgent need for finance to settle an outstanding HMRC debt, to pay off creditors, or to stop looming bankruptcy or repossession proceedings, you can use a second charge bridging loan to provide you with the funding that you need – quickly.
You may borrow up to 70% of the value of the property you offer as security (minus the value of any outstanding mortgages of loans also secured on the property).
To find out more about second charge bridging finance and whether it’s suitable for you, call us on 020 3780 7610 or click here for our contact form.
Speak to an account manager at Redrock by phone or via our contact form. Let them know how much you need to borrow and for what purpose.
We’ll be able to give you an indication almost immediately about the likelihood of success. We should have a lender in-principle decision in as little as 3 hours.
Your lender then orders a valuation.Your solicitors and the lender’s solicitors will engage. Surveyor’s report normally available within 5 days.
Upon an acceptable valuation report and the receipt of signed documents from your solicitor, funds normally available for draw down within 5-14 days of applying.
To fund renovations on primary residential property
To raise funding for other purposes
To release funding for the purchase of further investment property
To release funding from completed projects to fund and provide cash flow support for newer projects
To raise funds for working capital or investment in capital and machinery
To pay creditors including HMRC
Loan to value (LTV): 70%
100% funding is available providing you have additional security with sufficient equity
Exit strategy: sale or refinance (we can assist you with this)
Loan term: 3 to 24 months
Loan amount: £26,000+
Interest options: serviced, retained, rolled-up
Interest rates from: 0.75% per month
Decision: 24 hours
Completion: 5-14 days
Loans available in UK and Europe
No early repayment fees
Adverse credit considered
Available on first and second charges
Funding for renovation and improvement of existing property
Use of equity in existing properties to fund new investment property purchases
Use of equity in existing primary residential property to purchase another property to let out or develop
Clear HMRC debts
Repay creditors applying pressure
Working capital and expansion funding
Halting of bankruptcy or repossession proceedings
Purchase of plant, equipment, and machinery
What is bridge financing? Bridging finance describes a type of loan offered to borrowers to manage a short-term gap in their funding.
For example, if you purchase a property which requires renovation or refurbishment before you later sell it on or rent it out, you can use the equity you’ve built up in other property in your portfolio to fund the work which needs doing.
You may have used auction finance to purchase an additional property but now you require extra funding to carry out the renovation and refurbishment work to bring it up to the standards expected by homebuyers and renters.
You might then choose to use the equity you’ve built up in the other properties in your portfolio for the funding required to carry out the renovation and refurbishment work via a second charge bridging loan.
Equity is the difference between the value of a property on the open market and the size of the outstanding balance on any mortgage currently secured against it.
For example, if you have bought a new property which requires £50,000 worth of work on it to bring it up to current market standards and to add real value to it, you may choose to raise those funds by accessing the equity you’ve accumulated in one or more of your other investment properties.
You might already have another investment property which would sell for £200,000 on the open market. You may have held this property for a few years and now there is just a £80,000 outstanding balance on the mortgage. The equity in this property is £120,000.
With a second charge bridging loan, you can raise up to 70% of the value of your older investment property minus the value of any other mortgages or loans secured on it. 70% of the value of your older property is £140,000 (70% of £200,000). The outstanding balance of the mortgage is £80,000 so, subject to acceptance, you may raise up to the difference between these amounts – in this case, £60,000.
The bridging loan lender would advance you the £50,000 you need to renovate your newer property by taking a second charge on your older investment property behind the first charge already on it in place for the buy-to-let mortgage company you use.
Unlike with a mortgage, you don’t make monthly repayments on your bridging loan. You make one repayment to the lender for the full amount on or before the final day of the loan agreement. Second charge bridging loan agreements may last for between three and twenty-four months.
Once you have completed work on your newer property, you would then either choose to sell the property or to rent it out to others. Your lender will want to know which “exit strategy” you intend to take when you apply for the second charge bridging loan.
If you chose to sell, you would use the proceeds of the sale to settle the outstanding mortgage on your newer property (the first charge) and the second charge bridging loan on your older investment property.
If you chose to rent it out, you might arrange a residential buy-to-let mortgage to replace any secured finance you have on your newer property and, at the same time, to repay the second charge bridging loan on your older investment property.
You may also use a bridging loan to pay for property and/or land you wish to develop in the future.
Depending on the size of project you have in mind, you should consider repaying (exiting) your second charge bridging loan by arranging either refurbishment finance or development finance which you would also use to fund the work you intend to do and to repay your second charge bridging loan.
We can help you arrange exit finance on your refurbishment or development project.
Borrowers also apply for second charge bridging loans to raise funds. Most often, borrowers ask us to help provide them with finance for the following:
If you need to raise funds for a purpose not listed above, please call us on 020 3780 7610 or click here for our contact form.
Most bridging loans taken out by borrowers are not regulated. A second charge bridging loan, however, which has as the security on it your primary residential property is a regulated bridging loan unless you intend to use the funds for business purposes.
The reason these loans are regulated is to offer additional protection to homeowners similar to the protection they enjoy when taking out a mortgage or other loan secured on their home.
Borrowers ask for a regulated bridging loan (sometimes referred to as a limited payment second charge bridging loan) to provide the funding they need for major home improvement projects like lift conversions or extensions.
Redrock Commercial Finance is an FCA-regulated bridging loan broker – please get in touch with us if you require a regulated bridging loan.
The interest rate of the second charge bridging loan you take out will depend on a number of factors including the value of the loan you require, the amount of equity in the property or properties you pledge as security, your exit strategy, and your personal or business credit rating.
On second charge bridge loans used to fund the purchase of additional property, you may receive a lower interest rate offer from lenders if you are an experienced investor, a developer, or a landlord.
For an indicative estimate on the monthly and overall interest charges on a bridging loan, please click for our second charge bridging loan calculator.
We only present your second charge bridging loan proposal to the lenders on our panel:
To discuss a second charge bridging loan and the most advantageous options open to you on the funding you need, call us on 020 3780 7610 or click here for our contact form.