First Charge vs Second Charge Bridging Loans: Which Is Right for You?

What Is a Charge on a Bridging Loan?

A charge on a bridging loan is a security interest registered at HM Land Registry against the borrower’s property. The lender holds a legal claim on that asset until the debt is repaid. If the borrower fails to repay, the lender has the right to enforce against the secured property.

Priority determines who gets paid first. The first-registered charge holds senior priority. On enforcement or sale, proceeds go to the first-charge holder before anyone else. If the property sells for less than the combined secured debt, the second-charge holder receives what remains.

For bridging finance, charge type determines three things before you see a product offer: whether an existing mortgage must be redeemed, what consent is required from other lenders, and the rate you will pay. We treat charge type as the first filter on every bridging inquiry.

How Charge Priority Works in Practice

If a property worth £400,000 carries a first-charge mortgage of £200,000 and a second-charge bridge of £80,000, the total secured debt is £280,000. If the property sells at £290,000, the mortgage is repaid in full and the bridging lender receives £90,000 with no shortfall.

If the same property sells at £190,000, the first-charge mortgage still takes £200,000 of proceeds, leaving nothing for the bridging lender. That recovery risk is why second charge rates are higher and why lenders impose combined LTV caps on second charge products.

The priority structure also explains the consent requirement. The first-charge lender must agree to a second charge because additional secured debt reduces the equity buffer protecting their own position if values fall and enforcement becomes necessary.

First Charge Bridging Loans

A first charge bridge is used when you have no existing mortgage on the security property, when the existing mortgage is redeemed as part of the transaction, or when you own the property outright. The bridging lender holds the only registered charge on the asset.

We find regulated first charge rates currently from 0.55% per month at lower LTV bands (Octopus) to 0.65% per month at 75% LTV (United Trust Bank). Most lenders cap regulated first charge at 70% to 75% of open market value.

Speed is a practical advantage over second charge. Without a consent process, a first charge bridge can complete in 3 to 10 working days for straightforward cases. AVM valuation reduces the timeline further if your property is eligible, removing the surveyor visit entirely.

Second Charge Bridging Loans

A second charge bridge sits behind an existing mortgage. The mortgage remains in place; the bridge ranks second for repayment. The most common use case is releasing equity from your property without breaking a fixed-rate mortgage that carries early repayment charges.

The consent process is the risk most borrowers underestimate when you are weighing up second charge. The first-charge lender must formally agree to the second charge being registered at Land Registry. This takes 2 to 4 weeks. Some lenders refuse based on policy or LTV concerns.

Combined LTV is how second charge lenders calculate their exposure. The existing mortgage balance plus the new bridge cannot exceed the lender’s cap. We verify this calculation at the start of every second charge inquiry to confirm loan size is achievable.

Combined LTV: A Worked Example

A property is worth £500,000. The existing first-charge mortgage is £200,000, representing 40% LTV. A lender capping combined LTV at 70% will lend a maximum of £150,000 as a second charge: the combined secured debt would be £350,000, exactly 70% of £500,000.

If the same lender caps at 65% combined LTV, the maximum bridge falls to £125,000. That 5 percentage point difference reduces available borrowing by £25,000 on this property. At higher property values, the gap in borrowing capacity is proportionally larger.

Combined LTV caps vary by lender. MT Finance caps second charge at 65% combined. Glenhawk and United Trust Bank extend to 75%. Confirm the specific lender cap before assuming the loan size you need is available.

How Charge Type Affects Your Bridging Loan Rate

Second charge bridging carries a rate premium over equivalent first charge. The lender ranks second in any enforcement, recovery risk is higher if property values fall, and consent delays add operational friction. These factors are priced into the rate you pay.

The differential in practice is 0.1% to 0.3% per month above equivalent first charge rates. On a £300,000 bridge over 9 months, a 0.2% per month premium adds £5,400 in interest before arrangement fees. That premium compounds over a longer bridge term.

Provider data confirms the pattern. MT Finance charges from 0.90% per month first charge and from 0.99% per month second charge, a 0.09% to 0.10% premium at that end of the market. United Trust Bank starts at 0.57% per month for first charge at the lowest LTV band.

Choosing Between First and Second Charge Bridging

The decision turns on one calculation: does redeeming your existing mortgage and taking a first charge cost more or less than keeping it and paying the second charge premium? We recommend running this before instructing a broker.

The ERC test: take the early repayment charge on your existing mortgage. Add the first charge arrangement fee. Then compare that total against the second charge rate premium multiplied by the loan amount and the expected bridge term in months, plus any second charge arrangement fee.

If the ERC plus first charge fees is smaller than the second charge premium cost over the bridge term, take the first charge. If the ERC is larger, the second charge is cheaper overall. The maths is straightforward; getting the ERC figure from your existing lender is the starting point.

Choose first charge when: you have no existing mortgage on the security; redemption of the existing mortgage is cost-effective after the ERC calculation; speed is critical and a 2 to 4 week consent delay is prohibitive; or your LTV requirement exceeds what combined second charge would allow.

Choose second charge when: your existing mortgage has significant ERCs that exceed the second charge premium; you need capital but your fixed-rate deal has substantial time to run; or your first-charge lender’s consent is likely, confirmed by a broker at inquiry stage.

Once you have identified which charge type suits your situation, compare specialist bridging lenders to find the right rate for your loan amount and timeline.

First vs Second Charge Bridging FAQs