Is a Second Charge Bridging Loan Best for Gap Finance?

Alex Parsons Alex Parsons | Secured Loan Expert

Do you need to improve your cash flow on a short-term basis? Do you have enough equity in your home to cover the amount of cash you need? If so, a second charge bridging loan might be the right financing tool for you. These types of loan provide much-needed cash that you can use for lots of different purposes. What's more, bridging loans tend to be cheap and fast to obtain.

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For the record, there is a difference between a bridging loan and what we normally refer to as a secured loan. Both are secured in the sense that they are offered in exchange for the borrower putting up his or her home as collateral. The main difference between the two is the repayment term. Bridging loans tend to be short term financing instruments while traditional secured loans are intended to provide substantial amounts of money borrowed over long periods.

It used to be that bridging loans were only the domain of businesses and commercial property owners. The short-term financing such loans provided would allow business owners to fill in, or 'bridge', the financial gap existing between two major transactions. However, more lenders are now offering bridge loans to residential homeowners.

The residential loans are normally used to provide funding in that gap between purchasing a new home and selling an old one. As such, it is intended to be short term in nature. However, it is becoming more popular to obtain a bridge loan for the purposes of making home improvements, consolidating multiple lines of credit, etc.

How to Compare

If you want cheap, fast financing, you absolutely must compare multiple lenders. There is no way to know you are getting the best possible deal without comparing. There are three things in particular you need to pay attention to:

  1. Interest Rate – The interest rate tends to be the single most important factor people look at. Interest is the amount of money you pay, in addition to principal, for the privilege of borrowing. Higher interest rates mean the total cost of borrowing is also higher.
  1. Charges and Fees – Lenders providing second charge loans almost always tack on additional fees and charges. It pays to know what these fees and charges are before you accept a loan offer. Do not be afraid to ask for this information; you have a right to know what you are paying for before you agree to a deal.
  1. Receiving Funds – Lenders who offer fast loans may charge an extra fee to receive your funds in a couple of hours. You might want to ask about such fees ahead of time. If you can wait a little while, it might be more cost-effective to avoid the fees associated with getting fast money.

From our perspective, the best secured loans are those with the lowest built-in costs and interest rates. Nevertheless, there are times when borrowers have to compromise. Sometimes you will have to accept higher upfront costs in order to get a lower interest rate, and vice versa. Again, this is yet another reason why it is important to compare.

Get Started Today

The equity in your home represents a very powerful asset that you can leverage to your own financial advantage. Secured Loan Expert encourages you to get started today by considering and comparing secured loans from our whole of market lender comparison tables. You might be surprised at how much cash is available to you based on the equity in your home.

Choose a second charge bridging loan to fund short-term expenses or a more traditional secured loan for long-term borrowing. In either case, you will find the loans to be relatively cheap and fast. Applying today could result in you having the cash you need, as quickly as you need it. As far as we are concerned, there is no better financing tool for UK homeowners.

If you need help with either comparing offers or choosing the most suitable lender to match your personal circumstances just call one of our friendly secured loan experts who will provide their professional help and guidance without charge. Once you have decided on the right deal our team have the experience to make a fully optimised application on your behalf ensuring that you application will be received by the lender in the best possible light.

Our team will also advise you on all the costs that will be incurred for any loan offer that you choose before you decide to go ahead ensuring that there will be no hidden costs later in the process.

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