Second charge bridging loan to refinance existing loan

THE SCENARIO

Enness Bridging are specialists in securing short-term finance for a range of clients, from those seeking to purchase property at auction to commercial investors needing a quick solution for a strategic movement. An increasingly popular area we work in is residential bridging finance, as more and more bridging lenders enter the market, meaning this historically expensive form of finance is now cheap enough for clients to comfortably use against their homes.

I recently arranged a second charge bridging loan for a successful businessman working in finance. I have worked with this client several years previously, so he approached me again to see if Enness Bridging could assist him with refinancing his short-term finance facility.

My client had a first charge loan against his property for just over £500,000. The property in question was valued at just over £1million. However, he also had a second charge loan which was due to be refinanced, and he wondered if Enness Bridging could assist with finding him a favourable rate for this. Arranging second charge facilities can be slightly trickier, because should the client default on the loan, the repayment of the first charge takes precedence. Fortunately, I was confident we could help.

OUR SOLUTION

We have an excellent relationship with a lender I know is confident working with cases like this. I was able to illustrate that my clients’ business would be able to pay off the loan, meaning this lender was happy to offer him a second charge bridging loan of just under £200,000 for a 1-year term.

SECOND CHARGE BRIDGING LOAN FINANCE

If you require a second charge bridging loan, it’s important to note that this will generally come with a higher interest rate than first charge lender, because second charges are inevitably more of a risk for lenders. You should also be aware that, just like a first charge, your home could be at risk if you don’t keep up with your payments.

However, second charges can be cheaper than remortgaging altogether—particularly if you currently have a fixed-term first charge mortgage at a low rate, which would invite Early Repayment Charges (ERCs) should you refinance.

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