What is a first charge bridging loan?

A first charge bridging loan is a type of short-term loan that provides quick access to capital. It is a form of bridging finance, where the loan is secured against a property. The ‘first charge’ means the lender has the first claim on the property if the loan is not repaid. This gives the charge lender priority over any other lenders.

First charge bridging loans are typically used for property purchases, renovations, or to bridge a gap in financing, offering a fast and flexible solution when traditional mortgages are not an option.

How does a first charge bridging loan work?

A first charge bridging loan works by providing a short-term loan secured against a property. It is one of the types of bridging finance available, offering a quick loan when purchasing a new property or renovating an existing one.

The loan is provided by specialist bridging lenders and is typically repaid within 3-12 months, either through the sale of the secured property or by obtaining long-term financing such as a mortgage.

The ‘first charge’ means the bridging lender has the first claim on the property if the loan is not repaid, taking priority over any other lenders. This makes first charge bridging loans a popular choice for those looking to bridge a gap in their financing quickly and efficiently.

When to use a first charge bridging loan?

Some of the most common uses of first charge bridging loans include:

Remember, a first charge bridging loan is a short-term solution, and you should have a clear exit strategy in place to repay the loan within the agreed term, typically 3-12 months.

What’s the difference between first and second charge bridging loans?

The key difference between first and second charge bridging loans lies in the priority of the lender’s claim on the secured property.

First charge bridging loans

Second charge bridging loans

In summary, first charge bridging loans are the primary loan secured against a property, while second charge bridging loans sit behind an existing mortgage or loan. This difference in priority impacts the loan terms, interest rates, and overall risk profile for the lender and borrower.

Can I get a first charge bridging loan with bad credit?

Yes, it is possible to obtain a first charge bridging loan even if you have a poor credit history or low credit score. Unlike traditional mortgage lenders, bridging finance providers focus more on the value and suitability of the property being used as security, rather than solely on the borrower’s credit profile.

Bridging lenders understand that adverse credit events, such as missed payments or County Court Judgments (CCJs), can sometimes be unavoidable. As long as the property offers sufficient equity and the proposed use of the bridging loan is viable, many lenders will still consider your application. The key factors that bridging lenders will assess are:

If the lender is satisfied with these factors, they may be willing to offer a first charge bridging loan, even if you have a less-than-perfect credit history.