Second charge bridging finance lets a UK company raise short-term money against a property that already has a mortgage, without repaying that mortgage first. Before applying, check seven things: the first lender's consent, the real equity, whether the lender serves companies, the exit, the full cost, the credit search and the existing charges. EAL Holdings, which lends to UK-registered companies, considers second charges and is a useful benchmark.
Most company directors look at a second charge for one reason: the existing mortgage is too good, or too awkward, to disturb. It may be on a low fixed rate, it may carry a heavy early repayment charge, or the first lender may simply be slow. Borrowing behind it, for a short period, can release cash for a purchase, a deposit or works without touching the main loan.
The trade-off is that a second lender takes more risk, so it asks more questions. Specialist lenders such as EAL Holdings, which considers second charge bridging finance on residential, commercial and semi-commercial property, set out what they look at. The seven checks below are based on that kind of published criteria and on official guidance.
First charge or second charge: the difference
| Point | First charge bridge | Second charge bridge |
|---|---|---|
| Where it ranks | Repaid first from a sale | Repaid only after the first charge is cleared |
| Existing mortgage | Usually repaid or there is none | Stays in place |
| Consent | Not needed from another lender | The first lender's consent is often needed |
| Lender's view of risk | Lower, as it ranks first | Higher, so equity and exit are tested hard |
| Typical use | Buying, or refinancing the whole debt | Raising extra money while keeping the main loan |
1. Read your existing mortgage before anything else
Many commercial mortgage deeds restrict further borrowing against the same property without the first lender's written consent. Some lenders give it readily; some refuse or ask for a fee. Find your facility letter and mortgage deed, look for clauses on further charges, and ask your solicitor to confirm the position.
If consent is needed, start that request early. It is often the slowest part of a second charge case, and the new lender will normally want to see it before completion.
2. Work out the real equity, not the hoped-for value
A second charge lender looks at the total borrowing against the property, first charge plus its own loan, compared with the property's value. That means your existing balance, any arrears and any early repayment charge all matter.
Use a cautious value. A commercial unit with a short lease or a vacant floor may be valued well below what you paid. If the equity is thin, a second charge may not be possible, and refinancing the whole debt on a first charge may be the better route.
3. Check that the lender serves your type of borrower
This filter saves wasted enquiries. Under the FCA's PERG 4.4 guidance, a loan to an individual or trustee secured on land that is at least 40% used as a dwelling can be a regulated mortgage contract, and second charge lending to homeowners is regulated. A company borrowing for business purposes against its own commercial or investment property usually falls outside that regime.
So the market splits. Some lenders only do regulated second charges for homeowners. Others, like EAL Holdings, lend only to UK-registered companies and state that they do not lend to consumers. If the property is your own home, you need a lender or broker authorised for regulated lending, and you can check them on the FCA Register.
4. Make the exit the strongest part of the case
Every bridge needs a clear way out: a sale, a refinance onto a term loan, or money arriving from another deal. With a second charge, the exit has to clear both loans, or at least the bridge, on time.
EAL Holdings says its decisions are led by asset value and exit strategy, which is how most specialist lenders think. Write a short note of the exit, with evidence: an agent's valuation, a term lender's agreement in principle, or a contract for the sale that will repay the loan. Then add a fallback in case the first plan slips.
Lenders tend to be wary of exits that rely on things outside your control: a planning consent not yet granted, a buyer who has not instructed solicitors, or a refinance that assumes a higher valuation after works. None of these rules a case out, but each needs evidence. The more of the exit you can show on paper, the easier the conversation with an underwriter becomes.
5. Get the full cost in writing, in pounds
Ask every lender for a written breakdown of the total cost: interest, arrangement and exit fees, valuation and legal costs on both sides, and any fee the first lender charges for consent. Ask for the net amount you will actually receive.
Then compare that figure with the alternatives. If the first mortgage could be extended or refinanced with a further advance, that may cost less than a second charge, even after the early repayment charge. If speed or the existing deal makes a second charge the right tool, you will know why.
6. Ask about the credit search and prepare the paperwork
Directors often approach several lenders at once. A hard search is visible to other lenders, so ask each one how its first check works. EAL Holdings says its enquiries use a soft search, and a hard search follows only if you go ahead after an indicative offer.
Have these ready before you call:
- 6 to 12 months of business bank statements;
- recent filed or management accounts;
- proof of identity for all directors;
- details of the property and its existing mortgage, including the current balance;
- a short note of the exit strategy and the fallback.
That list matches what EAL Holdings says it typically asks for, and it says it gives a specific document list after a first conversation with its underwriters.
7. Check the existing charges and any personal guarantee
A company's charges are recorded at Companies House, so download the company's record and confirm what is already registered against it. On the property side, HM Land Registry's practice guide 29 explains how legal charges are registered on the title. Your solicitor will check both, but it helps to spot surprises early.
Ask too whether directors will need to sign a personal guarantee. The British Business Bank describes a personal guarantee as legally binding, making you personally liable if the business cannot repay. Ask whether it is capped and when it ends, and take legal advice before signing.
What we checked
We used FCA guidance on regulated mortgage contracts, Companies House and HM Land Registry guidance on charges, the British Business Bank's guide to personal guarantees and the published criteria of EAL Holdings as a worked example. We have not compared rates or fees, because second charge pricing depends on the property, the equity and the exit, and changes often.
Frequently asked questions
Do I need my first lender's permission for a second charge bridge?
Often, yes. Many mortgage deeds require the first lender's consent before another charge is registered. Check your deed and ask your solicitor.
Can a limited company get second charge bridging finance?
Yes. Several specialist lenders lend to companies on a second charge. EAL Holdings considers second charges for UK-registered companies on residential, commercial and semi-commercial property.
Is second charge bridging regulated?
It depends on the borrower and the property. Lending to an individual against their home is regulated. A company borrowing against business or investment property usually is not, according to the FCA's PERG guidance.
Can I get a second charge bridge with an imperfect credit history?
Sometimes. EAL Holdings says it does not require a perfect credit history and looks at adverse credit case by case, but each lender sets its own criteria.
Sources
- FCA Handbook: PERG 4.4, regulated mortgage contracts
- FCA Financial Services Register
- GOV.UK: Company changes, including mortgages and charges
- HM Land Registry: registration of legal charges (PG29)
- British Business Bank: guide to personal guarantees
General information only, not financial, tax or legal advice. Bridging finance is credit secured on property, which may be at risk if the loan is not repaid, and personal guarantees put your own assets at risk. Check terms carefully and take independent advice before you borrow.
