Unlocking Equity for Business Growth
When it comes to growing your business or expanding your property portfolio, accessing capital is often the biggest challenge. But what if you already have equity tied up in an existing property? That’s where a second charge mortgage could come in.
Second charge loans—particularly in the form of bridging finance—can be a smart, flexible way to raise funds without refinancing your main mortgage or disrupting existing arrangements. Here’s how they work, and why they’re becoming a go-to solution for business owners and property investors.
What Is a Second Charge Mortgage?
A second charge mortgage is a loan secured against a property that already has an existing mortgage on it. The first lender holds what’s known as the “first charge”, and the new lender takes the “second charge”—meaning they’re second in line to be repaid if the property is sold.
In practical terms, this allows you to release equity from a property without remortgaging. It’s particularly useful if your existing mortgage has a good rate you don’t want to lose—or if your lender won’t allow additional borrowing.
Why Use a Second Charge for Business Growth?
Whether you’re renovating premises, investing in equipment, or funding a new commercial project, business growth often requires fast access to capital. A second charge mortgage can help you:
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✅ Release funds quickly for expansion or reinvestment
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✅ Avoid early repayment charges on your current mortgage
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✅ Keep your existing loan and interest rate intact
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✅ Use a property as security to access competitive funding
It’s also an option for property investors looking to raise cash for a deposit on another property or to fund refurbishments while holding onto their current mortgage terms.
When Is a Second Charge the Right Option?
Second charge bridging loans are ideal when:
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You need funds quickly but already have a mortgage in place
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You want to retain your current mortgage deal
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You’re using the funds for property-related or business purposes
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You have sufficient equity in your existing property
Keep in mind that because this type of loan is secured, your property is at risk if repayments aren’t made. Having a clear repayment strategy—such as sale, refinance, or income—is essential.
How Second Charge Bridging Loans Work
Second charge bridging loans are a popular short-term option for both business owners and developers. They usually:
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Last between 3 to 12 months
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Are based on the loan-to-value (LTV) ratio, including both the first and second charge
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Require consent from your first charge lender
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Come with slightly higher interest rates than first charge loans due to the added risk to the lender
These loans can be arranged relatively quickly—often within days—making them useful in time-sensitive situations like auction purchases or urgent project funding.
How can we help?
If you’re sitting on untapped equity, a second charge mortgage could be the key to unlocking new opportunities without disturbing your current financial arrangements.
At Cotterell & Cotterell Commercial Finance, we specialise in sourcing second charge bridging finance for businesses and property investors across the UK. We’ll help you assess whether it’s the right option for your goal and find a lender that suits your timeline and needs.
📞 Ready to release equity for growth? Contact us today to explore your options.
