Second charge bridging loans have emerged as a flexible and swift solution for borrowers who are looking for short-term funds. However, just like any financial product, there are many myths which often surround these loans, leading to confusion and uncertainty among potential borrowers.
Myth 1: Second Charge Bridging Loans Are Complicated and Time-Consuming
One common myth is that obtaining a second charge bridging loan is an arduous and time-consuming process. Contrary to this belief however, every type of bridging loan is designed to be more straightforward and faster to secure than a traditional mortgage. With a second charge bridging loan, the lender takes security against the property in addition to the existing mortgage; this reduces the risk and streamlines the approval process. As this financial product has minimal paperwork and fewer stringent requirements, borrowers can access funds more rapidly.
Myth 2: Second Charge Bridging Loans Are Exclusively for Individuals in Financial Distress
Another myth is that second charge bridging loans are only suitable for individuals facing financial difficulties. Many borrowers actually use second charge bridging loans strategically for property investments, renovations, bridging property chains and time-sensitive ventures where finance is needed quickly.
Myth 3: Second Charge Bridging Loans Have Unaffordable Interest Rates
Some potential borrowers may believe that second charge bridging loans come with exorbitant interest rates. While it is true that these loans typically carry higher interest rates than traditional mortgages, it is important to understand the reasons behind the rate differences. Second charge bridging loans are short-term solutions and lenders assume higher risks during the brief loan term. However, when compared to the potential gains or cost savings from quick property acquisitions or timely investments, the slightly higher interest rates may be justified.
Myth 4: Second Charge Bridging Loans Are Only for Residential Properties
Second charge bridging loans can be secured against various property types, including commercial properties, land and even mixed-use developments. The versatility of these loans makes second charge bridging loans an attractive option for property investors and entrepreneurs with diverse portfolios.
Myth 5: Second Charge Bridging Loans Are Only Offered by Banks
While most high street banks do offer second charge bridging loans, they are not the only providers. The lending market has evolved, and specialised bridging loan lenders have emerged, with UK Property Finance being one of many. Like other lenders we are able to offer tailored solutions that offer competitive rates and faster processing times. As we are a whole of market broker we are able to compare rates from all lenders across the UK and make sure you get the best possible deal.