Second charge bridging loan on commercial property:raising funds without refinancing
A second charge bridging loan is short-term finance secured on a commercial property that already has a mortgage, ranking behind that first charge, so you can raise money without repaying or disturbing the existing loan. It is a useful tool when your commercial mortgage is on good terms, would be expensive to break, or simply does not need to change.
The trade-offs are real: the second charge lender is repaid only after the first, so it lends less and charges more, and the first lender usually has to agree. This page explains how the structure works on commercial property and when it is the right answer.
Key takeaways
A second charge bridging loan raises funds behind an existing commercial mortgage without refinancing it.
First lender consent is usually required on commercial property and is the main cause of delay.
Lenders assess combined LTV across both charges, and price higher than a first charge.
Compare the total cost against breaking the existing mortgage, including any early repayment charge.
A second charge on a home you or your family live in may be regulated, and goes to an FCA directly authorised firm.
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How does a second charge bridging loan work?
When you borrow against property, the lender registers a charge at HM Land Registry. The first registered charge is repaid first if the property is sold. A second charge sits behind it and is repaid from whatever is left.
Feature
First charge bridge
Second charge bridge
Ranking
Repaid first
Repaid after the first charge
Existing mortgage
Repaid or replaced
Left in place
Typical LTV
Commonly up to 70% to 75% on standard commercial property
Almost always, on commercial property. Most commercial mortgage terms prohibit further charges without the lender's written consent. Taking a second charge in breach of those terms can be an event of default on your main loan, which is the last thing you want.
The consent process usually involves:
Your solicitor or the second charge lender writes to the first lender with details of the proposed loan.
The first lender reviews the amount, the term and the combined borrowing.
It gives consent, sometimes with conditions or a fee, or declines.
In some cases a deed of priority is agreed, confirming how much each lender ranks for.
Consent is the most common cause of delay on a commercial second charge. Some first lenders respond in days; others take weeks. Ask early, and have a fallback, such as refinancing both loans onto a single first charge bridge, if consent is refused.
Have a deal in front of you?Send us the property and the numbers. We will tell you quickly whether it is fundable.
How much can you borrow on a second charge?
The second charge lender looks at the combined loan to value: the existing mortgage balance plus the new loan, as a percentage of the property's value. Because it ranks second, it caps combined borrowing lower than a first charge lender would.
Illustrative example: a commercial building is valued at £1,000,000 with a £400,000 first mortgage. If a lender capped combined borrowing at 65%, total debt could reach £650,000, leaving room for a gross second charge of up to £250,000, before fees and any retained interest. Round numbers, for example only.
The available headroom depends on the property, its use, the first mortgage terms and your exit. Use our LTV calculator to check your current gearing first.
How is a second charge bridging loan priced?
Second charges cost more than first charges, because the lender only gets paid after the first lender is repaid in full. Pricing reflects:
The property: mainstream commercial stock is easier than specialist assets.
The first lender: a mainstream bank first charge is easier to sit behind than a short-dated bridge.
The exit: how and when both charges will be repaid.
Interest is charged monthly and is usually retained or rolled up. Expect an arrangement fee, typically around 1% to 2% of the loan, plus valuation and legal fees for both sides. Compare the total cost against breaking your mortgage, including any early repayment charge, before you decide. Our rates page explains how lenders price commercial bridging.
Do you need a solicitor for a second charge?
Yes. On commercial property, both you and the lender will have solicitors. Your solicitor checks the loan terms, deals with the first lender's consent, reviews title and handles completion. The lender's solicitor registers the second charge at HM Land Registry and, where agreed, the deed of priority. Some lenders allow one firm to act for both sides on simpler cases, which can save time.
How do you remove a second charge from a property?
You repay it. Your solicitor requests a redemption statement from the second charge lender showing the full amount due, including interest to the repayment date and any fees. Once paid, the lender issues a discharge, usually on form DS1, and the charge is removed from the title at HM Land Registry, along with any related restriction.
The money to repay typically comes from a sale, a refinance that clears both charges, or another source such as a business receipt. That exit is assessed at the start, so build in enough term for it to happen.
Is a second charge bridge regulated?
A second charge secured on commercial or investment property for business purposes is normally unregulated, and we arrange it directly. If the second charge is secured on a property that you or an immediate family member live in, such as your home or a flat above your shop, it may be a regulated mortgage contract, and we introduce those cases to a firm directly authorised by the Financial Conduct Authority. See our page on semi commercial bridging loans for how this applies to buildings with flats.
Unregulated commercial and investment bridging is arranged directly. Any case where the security includes a home you or an immediate family member occupies, including a flat above commercial premises, may be regulated and is introduced to a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority ourselves. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
We cannot speak for any commentator. The widely shared consumer message is that bridging is short-term, more expensive than a mortgage, and should only be used with a clear way to repay. That applies to a second charge bridge too. Compare the total cost with alternatives such as a further advance or a refinance before you commit.
How do you remove a second charge on a property?
Repay it in full. Your solicitor obtains a redemption statement from the lender, pays the amount due, and the lender issues a discharge, usually on form DS1. The charge and any related restriction are then removed from the title at HM Land Registry. Repayment normally comes from a sale or a refinance.
Do you need a solicitor for a second charge?
Yes, for commercial property. Your solicitor reviews the loan, obtains the first lender's consent, checks title and completes the loan. The lender's solicitor registers the charge and any deed of priority. On straightforward cases some lenders allow one firm to act for both sides, which can speed things up.
Are second charge mortgages hard to get?
They are harder than first charge loans because the lender ranks second and needs the first lender's consent on most commercial property. With sensible combined borrowing, a mainstream first lender and a clear exit, they are readily available. Refused consent or high existing gearing are the usual obstacles, and a single first charge refinance may then be better.
Can I get a second charge without the first lender's consent?
On commercial property you should assume consent is needed, because most commercial mortgage terms prohibit further charges without it. Proceeding without consent can put you in default on your main loan. We check the first mortgage terms at the outset and, if consent is likely to be refused, look at refinancing both loans instead.
Is a second charge bridging loan cheaper than refinancing?
Sometimes. A second charge costs more per pound borrowed, but it can be cheaper overall if refinancing would trigger an early repayment charge, lose a good rate on your main mortgage, or involve a larger loan than you need. We compare the total cost of both routes over the expected term before recommending one.
