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How much do you want to borrow? £100,000

£25,000
£250,000

Over how many months? 6 Months

3 Months
12 Months

What is a second charge bridging loan?

A second charge bridging loan is a loan that sits behind an existing mortgage. If you have enough equity left in the property to secure additional borrowing against it, you may be able to take out a second charge.

A second charge loan indicates that a higher priority, first charge loan is already secured against the asset / property (typically a mortgage), which should be repaid before the second charge loan, should the asset ever be repossessed.

A second charge bridging loan provides fast finance, for 3-12 months before an exit, typically either refinancing to a longer term financial solution or selling the property to pay back the loan.

What can a second charge bridging loan be used for?

Second charge bridging loans are a highly versatile form of finance. Whether you own just a single buy to let property, or have a large property portfolio, unexpected costs always arise and a second charge bridging loan is a great way to arrange finance quickly to cover this possibility.

You may be expanding your business by buying another property at auction; if so you might consider choosing to take out a second charge bridging loan to pay for a property while you arrange a longer term finance solution such as a buy to let mortgage.

You may wish to purchase a new property and need some short term finance whilst you wait for another property to sell, or fund some property development; if so, a second charge loan could help. Whatever you may need to raise additional finance for, we may be able to be of assistance to you.

The loan amount can be tailored to suit your needs, and the term of the loan can range from 3 months up to a year. Mercantile Trust also accepts HMO properties being used as security for your second charge loan.

How much could I borrow using a second charge bridging loan?

As the second charge bridging loan is secured against the equity in your property, the amount you can borrow relies on the available equity. Equity is the portion of your home that you own outright free from any mortgage.

Mercantile Trust allows you to borrow from as little as £25,000 to £250,000 and repay over a period of 3 to 12 months, entirely dependent on your personal needs. They have a maximum loan-to-value ratio of 75% (also referred to as 75% LTV). This means we will lend to you a maximum of 75% of the value of your property.

As with many other types of finance, the more deposit you can provide, the less you’ll need to borrow. This reduces the overall cost of the loan as the lender will be taking on less risk.

What are the interest rates on a second charge bridging loan?

Second charge bridging loan interest rates can sometimes be higher than some other types of loan. This is because they offer the benefit of borrowing larger amounts of money quickly, as well as letting you repay them over short periods of time, without any penalty charges.

Like other forms of lending the interest rates is partially bases on the risk of the finance not being paid back. To mitigate this risk when you apply for a second charge bridging loan the lender will ask you to have a feasible exit strategy when you take out the loan. This usually tends to be one of two things:

  • • You plan to sell the property and repay the loan from the proceeds
  • • You plan to switch to a longer term form of finance, typically a mortgage.

Bridging loan interest rates reflect the short term nature of the financial agreement, so may often be higher than some other forms of lending.

Accepted for a second charge bridging loan

How quickly can you get a bridging loan?

Second charge bridging loans are far quicker to complete than some other forms of long-term borrowing like mortgages. Many can be completed in just a few weeks.

One of the main benefits of a second charge bridging loan is how quickly you can borrow large amounts of money. Some mortgages can take months to complete, but a bridging loan can be completed in just a few weeks (sometimes even quicker depending on the situation).

A second charge bridging loan may require consent from your first charge mortgage lender to go ahead, it’s best to contact your mortgage lender early in these scenarios to mitigate any potential delays. This will allow you to take even greater advantage of one of the key advantages of a bridging loan, the speed they take to set up.

Because they can be faster than a mortgage, they can be used to buy a property quickly. A great example of this is property investors who don’t want to miss a bargain at auction while they arrange a mortgage. A second charge bridging loan could also be a great solution if you are renovating a property and need access to cash for a short period of time.

It’s important to remember that the more complex the case, the longer it may take to complete. Also, the speed of completion will always depend on how quickly you provide any required information, or return any paperwork to the lender

I have poor credit history, could I still be accepted?

Having a poor credit profile doesn’t mean that you won’t be accepted for a second charge loan.

Although some lenders may not be able to assist you, we could be able to help. We consider all credit histories including those that have:

  • • Accounts in defaults
  • • CCJ’s (County Court Judgement)
  • • Missed payments
  • • Historic IVA (individual voluntary arrangement) which is now settled

Accepted for a second charge bridging loan

How do I apply?

Applications for second charge bridging loans are easy to complete. The straightforward process begins with you either filling out our online application form or ringing one of our team of experienced advisors using the number at the top of this page

What are the alternatives to a second charge bridging loan?

It depends on your unique needs and circumstances, but typical alternatives include commercial loans, secured loans, development finance and asset loans.

Although a bridging loan may provide the best option when it comes to both speed and cost of short term borrowing, there may be a better alternative if these things are less important to you.

If funds are required quickly by an investor to secure the purchase of a buy to let property that will be refinanced using a buy to let mortgage in the coming months as the exit strategy, it may be easier to wait to arrange a buy to let mortgage which may only take a few weeks.