When a bridging loan is secured against a property, the lender registers a legal charge — a formal claim against the property that gives the lender the right to sell it if the borrower defaults. Whether this charge is registered as a “first charge” or a “second charge” fundamentally affects the cost, the available LTV, the lender’s risk appetite, and the process involved. This guide explains the difference in practical terms, covers when each type is used, and helps you understand which applies to your situation.
What Is a Legal Charge?
A legal charge is a security interest registered against a property at HM Land Registry. It gives the holder (the lender) a legal right over the property — specifically, the right to force a sale of the property to recover the debt if the borrower fails to repay. Charges are registered in order of priority: the first lender to register holds the first charge, the next holds the second charge, and so on. This order of priority determines who gets paid first if the property is sold to recover debts.
First Charge Explained
A first charge gives the lender priority over all other creditors secured against the property. If the borrower defaults and the property is sold, the first charge holder is repaid in full before any second charge holder receives anything. This priority position means the first charge lender carries the least risk — and therefore offers the lowest interest rates and highest LTV.
When First Charge Bridging Is Used
The majority of bridging loans are first charge facilities. They are used when purchasing a property — the bridging lender provides the purchase funds and takes a first charge against the property being purchased. This is the standard structure for auction purchases in areas like Peckham, Walthamstow, and Stratford, chain breaks across Clapham, Fulham, Chiswick, and Wimbledon, investment acquisitions in Canary Wharf, Greenwich, and Bermondsey, and refurbishment projects across all London markets.
First charge bridging is also used when refinancing a property that has no existing mortgage — the borrower owns the property outright and takes out a bridging loan secured as a first charge, typically to release equity for another purchase or to fund works.
First Charge Terms
LTV: up to 75% (some lenders offer up to 80% with additional security). Interest rates: from 0.45% per month for prime London property at conservative LTV. Arrangement fees: typically 1-2% of the loan amount. These are the most competitive terms in the bridging market because the lender’s risk is lowest in the first charge position.
Second Charge Explained
A second charge bridging loan is secured against a property that already has a first charge in place — typically an existing mortgage. The second charge lender ranks behind the first charge holder in priority. If the property is sold to recover debts, the first charge lender is repaid first, and the second charge lender only receives what remains.
This subordinate position means second charge bridging carries more risk for the lender, which is reflected in higher interest rates and lower LTV limits compared to first charge facilities.
When Second Charge Bridging Is Used
Second charge bridging is used when you need to raise capital against a property that already has a mortgage and you do not want to (or cannot) redeem the mortgage. Common scenarios include raising a deposit for a second property — a homeowner in Hampstead with a low-rate mortgage on their existing home takes out a second charge bridge to fund the deposit on a new purchase, rather than disrupting their favourable mortgage terms. Funding refurbishment works — a property owner in Islington takes a second charge bridge against their home to fund a basement conversion, loft extension, or full refurbishment, with the exit being a remortgage at the improved value. Funding care home fees — a family takes a second charge against a property to fund care home fees while the property is prepared for sale. Business purposes — raising short-term capital for a business requirement, secured against residential property that has an existing mortgage.
Second Charge Terms
LTV: calculated on the combined debt (first charge mortgage plus second charge bridge). Total combined LTV typically up to 70-75% of the property value. Interest rates: typically 0.10-0.25% per month higher than equivalent first charge rates, reflecting the additional risk. Arrangement fees: typically 2% of the loan. The first charge lender must consent — most mortgage lenders will agree to a second charge being placed behind their mortgage, but the consent process adds 1-2 weeks to the timeline.
First Charge vs Second Charge: Key Differences
Priority on default is the fundamental difference. The first charge lender is repaid first. The second charge lender only receives the residual. This risk difference drives every other distinction between the two products.
Rates are lower on first charge because the lender’s risk is lower. The same property, same borrower, same LTV — a first charge facility will be 0.10-0.25% per month cheaper than a second charge. On a £500,000 facility held for 8 months, this difference is £4,000-£10,000.
LTV is higher on first charge — up to 75-80% versus 70-75% combined for second charge. This means you can borrow more relative to the property value with a first charge facility.
Process is simpler for first charge — there is no need for consent from another lender. Second charge requires the first charge holder’s consent, which adds time and introduces a risk that the consent may be refused or delayed.
Speed is faster for first charge — typically 10-14 working days versus 2-4 weeks for second charge (due to the consent process).
Combined LTV: How It Works on Second Charge
When a second charge is placed, the total lending against the property is the sum of the first charge (existing mortgage) and the second charge (new bridging loan). Lenders calculate this combined LTV to ensure the total debt does not exceed a safe proportion of the property value.
Example: a property in Barnes valued at £1,500,000 with an existing mortgage of £600,000 (40% LTV). The maximum combined LTV is 70%, so the maximum total debt is £1,050,000. The maximum second charge bridge is therefore £1,050,000 minus £600,000 = £450,000. In practice, most second charge lenders would cap the second charge element at a lower level — perhaps £300,000-£350,000 — to maintain a comfortable equity buffer.
Getting Consent from the First Charge Lender
Before a second charge bridging loan can complete, the existing mortgage lender must consent to the second charge being registered behind their first charge. The consent process involves your solicitor writing to the first charge lender requesting consent, the first charge lender reviewing the request (typically 5-15 working days), and the first charge lender issuing a formal consent letter (sometimes called a “deed of priority” or “deed of postponement”).
Most mainstream mortgage lenders — including high street banks, building societies, and specialist BTL lenders — will consent to a second charge. However, consent is not guaranteed. Some lenders refuse as a matter of policy. If your mortgage lender refuses consent, a second charge bridge is not possible without first redeeming the mortgage — which may mean taking a first charge bridge for the full amount needed (repaying the existing mortgage and releasing the additional capital in one facility).
When to Choose First Charge vs Second Charge
Choose first charge when you are purchasing a new property and no existing mortgage applies, when you are refinancing a property you own outright, when you want the lowest possible cost, when you need maximum LTV, or when you need to complete quickly.
Choose second charge when you have an existing mortgage with favourable terms that you do not want to redeem, when the cost of redeeming the mortgage (early repayment charges, loss of a low fixed rate) exceeds the additional cost of second charge bridging, when you need to raise capital against your home for a specific purpose (deposit, refurbishment, care fees) without disturbing your existing mortgage, or when the total amount needed is modest relative to the property value (making the combined LTV comfortable).
Frequently Asked Questions
Can I have a bridging loan and a mortgage on the same property?
Yes — this is exactly what a second charge bridging loan is. The mortgage sits as the first charge and the bridge sits behind it as the second charge. The first charge lender must consent.
Does the existing lender always consent to a second charge?
Usually, but not always. Most mainstream lenders consent routinely. Some smaller or specialist lenders may refuse. Your broker should check the first charge lender’s policy before applying for the second charge facility to avoid wasting time and fees.
Is second charge bridging more expensive?
Yes — typically 0.10-0.25% per month higher than equivalent first charge rates, plus a slightly higher arrangement fee (often 2% vs 1.5%). The higher cost reflects the lender’s subordinate security position.
Can I get a second charge on a buy-to-let property?
Yes. Second charge bridging is available on buy-to-let properties with existing BTL mortgages. The BTL lender must consent to the second charge. This is commonly used by landlords raising deposits for additional investment properties across London — leveraging equity in a Battersea flat to fund a purchase in Hackney, for example.
What happens if I default on a second charge bridging loan?
The second charge lender can enforce their security, but the first charge holder has priority. In practice, the second charge lender would seek to recover the debt by forcing a sale of the property — but the first charge mortgage must be repaid in full from the sale proceeds before the second charge lender receives anything. The borrower remains liable for any shortfall.
Does Platinum Global charge a fee?
No broker fee on facilities of £500,000 or above.
Get Advice on First and Second Charge Options
Platinum Global Bridging Finance arranges both first and second charge bridging loans across London and the UK. Whether you are purchasing a property in Holland Park, raising a deposit against your Highgate home, or funding a refurbishment in Brixton, we identify the most cost-effective structure for your specific situation. Contact us at 64 Knightsbridge, London for indicative terms within 24 hours.