Releasing Equity with a Second Charge Bridging Loan

With national average house prices at an all-time high – now around £270,000 – millions of UK homeowners could be sitting on a small fortune. Where the conventional approach to equity release is unappealing, a second charge bridging loan could be just the thing.

Equity release is often misinterpreted as a fairly inflexible financial product. Contrary to popular belief, raising money by way of equity release does not have to mean selling your home outright to a bank or service provider.

In fact, you do not need to ‘sell’ any proportion of your home whatsoever, in order to release some of the equity you have tied up in your property.

How to Release Equity Without Selling your Home

A second charge bridging loan works in a similar way to a mortgage, in that the loan is secured against your home. The amount you can borrow will be determined by how much equity you have in your property at the time.

For example, if your home is worth £300,000 and you have repaid £200,000 of your mortgage, this is the equity you have in your home - £200,000. With a second charge bridging loan with an LTV of 75%, you could borrow up to £150,000 for any purpose (75% of £200,000).

However, bridging loans differ from conventional mortgages in that they are strictly short-term facilities. Most bridging loans are repaid within 12 months or less, in the form of a single lump-sum payment inclusive of interest and borrowing costs.

Why Take Out a Second Charge Bridging Loan?

Much of the appeal of bridging finance lies in its flexibility. Unlike conventional loans and mortgages, a bridging loan can be used for any legal purpose whatsoever.

For example, homeowners planning to put their properties on the market often use bridging finance to conduct pre-sale renovations and refurbishments. In doing so, they increase the value of their property to an extent that far exceeds the costs of the loan.

A bridging loan can also be used to buy a car, finance the holiday of a lifetime, set up a home office and so on.

Along with the flexibility of the facility, additional benefits of second charge bridging loans include the following:

•      Monthly interest starting from just 0.5% (sometimes even lower)

•      No maximum loan size – borrow anything from £50,000 to £10 million or more

•      Flexible repayment terms from 1 to 24 months

•      Interest can be rolled-up into the final payment – no monthly repayments needed

•      Borrow up to 75% LTV against the value of your home

•      No upfront fees, no exit fees and no penalties for early repayment

•      Loans available for subprime applicants with poor credit

•      No proof of employment for income level required

Importantly, a second charge bridging loan can be arranged in a matter of days, making it ideal for time-critical purchases and investments. Where time is a factor and you need to raise a significant amount of money as quickly as possible, nothing is faster or more flexible than a bridging loan.

For more information on the benefits and uses of bridging finance, contact a member of the team at UK Property Finance today.

Craig Upton supports UK businesses by increasing sales growth using various marketing solutions online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to rank in organic search. Craig is also the CEO of iCONQUER, a UK based SEO Firm and has been working in the digital marketing arena for many years. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, djkit.com, UK Bridging Loans, Serimax and has also supported UK doctors, solicitors and property developers to gain more exposure online. Craig has gained a wealth of knowledge using Google and is committed to creating new opportunities and partnerships.