release equity fast with a 2nd charge bridging loan

Landlords and property investors looking to release equity are finding themselves in an increasingly strong position thanks to a buoyant housing market. UK prices keep rising as demand continues to surge, with Nationwide reporting that annual house price growth in the UK hit 12.6% in February. This made the average house price £260,230- an all-time high. While these prices could present a problem for some prospective buyers, they represent an opportunity if you bought a property with a good loan-to-value and are now looking to capitalise on its increased value.

how to release equity

Reasons for wanting to release equity include – but aren’t limited to – purchasing an investment property, expanding a business, or even redeveloping an existing property. If you’re looking to undertake these kinds of projects and already have a mortgage secured against your property but require further funds for a short period of time, a second charge bridging loan can be used to unlock equity, and fast.

A second charge bridging loan sits behind an existing loan or mortgage and as long as there’s enough equity in the property, can be secured on all property types, including buy-to-let, residential and commercial assets.

The benefits of opting for a second charge bridging loan instead of a remortgage are that funds can be released quickly and as it’s designed to be a short-term fix, you aren’t tied into lengthy repayments. In fact, most bridging loans are 12 months, although shorter and longer terms are available.

Furthermore, if you’re locked into an attractive fixed rate with your current mortgage provider or you are required to pay a penalty for switching your existing mortgage early, a second charge bridging loan may be cheaper as your existing mortgage stays in place. It would be beneficial to run a cost comparison in this scenario just to make sure.

A second charge bridging loan can also be particularly helpful if you have an unusual income structure, such as being self-employed, or have a complex financial background, as bridging loan providers don’t rely on the same tests as a mortgage lender and can tailor a solution to suit your individual borrowing needs.

It is worth remembering that a second charge bridging loan will always require consent from your first charge lender.

how a second charge bridging loan can help

Our ability to release funds fast was recently shown when we assisted a client who needed £197,700 to purchase new premises for their cosmetic surgery company. They were unable to secure high street finance due to having less than two years of accounts, but they did have a buy-to-let property valued at £350,000. The BTL property had a first charge mortgage of £29,800 which enabled us to issue a second charge bridging loan of the full £197,700 at 65% LTV. Interest was retained at 0.85% over 24 months, with no exit fees or early repayment charges.

By releasing equity in their BTL property, the client was able to purchase the new business premises and expand their company, as well as their property portfolio. They have two options to repay our bridging loan. Firstly, by refinancing with a commercial mortgage provider once they have been trading long enough to provide suitable accounts, and secondly by refinancing the security property with a standard BTL mortgage.

In total, this case was completed in only nine working days thanks to the dedication of our team and the strong relationships we have with the broker, solicitor and valuer.

find out more

A second charge bridging loan from MT Finance can be provided quickly and effortlessly. As we are an asset-based lender, we don’t require evidence of your trading history, accounts, or proof of income. Instead, we focus on your future plans which allows us to take a practical approach to each application.

Our second charge bridging loan features include:

  • Loans from £50,000 – £10,000,000
  • Terms from 1-24 months
  • Up to 65% LTV
  • Residential & semi-commercial property
  • Owner occupied residential property for business purpose use
  • No up-front fees, no exit fees, no ERCs

If you would like to find out more about our second charge bridging loans then our team can be contacted online, via email or on 0203 051 2331.

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