# What’s the Difference between a First, Second and Third Charge Bridging Loan?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-31
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Understanding First, Second, and Third Charge Bridging Finance
Meta Description: Learn about the different types of bridging finance and how they work, from first charge loans with no existing debts, to third charge loans for riskier
URL: https://financedigest.com/whats-the-difference-between-a-first-second-and-third-charge-bridging-loanhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1331285518-1736816276161-compressed.jpg)

Bridging finance can be a uniquely convenient and cost-effective facility for raising short-term capital. When applying for a bridging loan, you will need to consider whether the security (collateral) you provide to cover the costs of the loan already has one or more debts secured against it.

This is where the difference between first, second and third charge bridging loans comes into play.  This number – one, two or three – represents the [order in which the debts you have secured](https://www.financedigest.com/fingerprint-cards-ab-signs-partnership-gemalto-secures-worlds-first-volume-order-fingerprint-sensors-dual-interface-payment-cards.html "Fingerprint Cards AB signs partnership with Gemalto and secures the world’s first volume order of fingerprint sensors for dual-interface payment cards") on the property would be repaid, in the event of its repossession due to non-repayment.

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/ukpf-logo-square-1-1736816276122-compressed.jpg)

An important factor for your [lender to consider ensuring their money](https://www.financedigest.com/mistakes-to-avoid-while-choosing-a-private-money-lender.html "Mistakes To Avoid While Choosing a Private Money Lender") is safe irrespective of the outcome.

**First Charge** [Bridging Finance](https://www.financedigest.com/is-it-risky-to-use-bridging-finance-for-my-business.html "Is it risky to use bridging finance for my business?")

With a first charge [bridging loan](https://www.financedigest.com/common-uses-for-bridging-loans-and-what-youll-need-to-get-one.html "Common Uses for Bridging Loans and What You’ll Need to Get One"), the asset you use to secure the loan will have no other debts currently secured against it. This means that if you are unable to repay the loan and the asset is sold, your bridging lender would be paid first using the [capital raised](https://www.financedigest.com/shares-in-monte-dei-paschi-plunge-14-after-capital-raise.html "Shares in Monte dei Paschi plunge 14% after capital raise").

First charge [bridging finance is issued against properties with no outstanding mortgage or loan repayments](https://www.bridgingfinance.com/), where the borrower owns 100% of the equity. Bridging [loans can also be secured against other types](https://www.financedigest.com/types-of-business-loans.html "Types of business loans") of assets – anything from industrial equipment to fine jewellery to stocks and shares.

**Second Charge** [Bridging Finance](https://www.financedigest.com/sas-bridge-financing-keeps-survival-hopes-airborne-shares-climb.html "SAS bridge financing keeps survival hopes airborne, shares climb")

If you secure bridging [finance against a property](https://www.financedigest.com/what-has-brexit-done-to-financing-your-dream-property-in-portugal.html "What has Brexit done to financing your dream property in Portugal?") where the original mortgage has not been fully repaid, this will constitute a second charge bridging loan. In this instance, the capital raised by [selling the property in the event of non-repayment would first be used to clear the original](https://www.financedigest.com/vhs-tapes-selling-for-46000-higher-than-original-price.html "VHS tapes selling for 46,000% higher than original price") mortgage, and then allocated to the bridging lender.

This presents an additional risk to the lender, as the remaining equity after the original [mortgage is repaid may not always be enough to pay](https://www.financedigest.com/7-questions-to-ask-before-paying-off-your-mortgage-early.html "7 Questions to Ask Before Paying Off Your Mortgage Early") off the outstanding bridging loan.

**Third Charge** [Bridging Finance](https://www.financedigest.com/bridging-finance-for-property-development.html "Bridging Finance for Property Development")

While it is possible to arrange a [third charge bridging loan with some lenders](https://www.financedigest.com/almost-a-third-of-consumers-see-default-as-the-responsibility-of-lenders-not-the-borrower.html "Almost a third of consumers see default as the responsibility of lenders – not the borrower"), others consider such facilities too risky. Third charge [bridging finance](https://www.financedigest.com/using-bridging-finance-to-avoid-repossession.html "Using Bridging Finance to Avoid Repossession") is issued where there is already a first and second charge secured against the property (or asset of value).

This would therefore mean that the bridging finance lender is technically ‘third in line’ for repayment, if the borrower [defaults on their debts](https://www.financedigest.com/oil-slumps-5-to-five-week-low-amid-us-debt-default-fears.html "Oil slumps 5% to five-week low amid US debt default fears") and forfeit their property.  Consequently, third charge [bridging finance](https://www.financedigest.com/using-bridging-finance-to-purchase-an-un-mortgageable-property.html "Using Bridging Finance to Purchase an Un-mortgageable Property") is only issued where a lender has complete confidence in the applicant’s ability to repay _all_ their outstanding debts in full.

[**Independent Expert Advice**](https://www.financedigest.com/advice-for-retailers-as-covid-restrictions-ease-this-independent-retailer-month.html "Advice for retailers as COVID restrictions ease this Independent Retailer Month")

Before [applying for a bridging loan of any kind](https://www.ukpropertyfinance.co.uk/bridging-loans/), consulting with an experienced broker comes highly recommended. This will help you build a better picture of the options available, along with which the type of [bridging finance](https://www.financedigest.com/using-100bridging-finance-grow-business.html "Using 100% Bridging Finance to Grow your Business") best suits your requirements.

For more information on any of the above or to discuss a bridging loan application in more detail, contact a member of the [team at UK Property Finance](https://www.financedigest.com/finance-teams-have-been-left-in-the-dark-on-the-real-cost-of-working-from-home.html "Finance teams have been left in the dark on the real cost of working from home") today.

**![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/craig-upton-new-photo-1736816276060-compressed.jpg)**

**About the Author:**

Craig Upton supports UK [businesses by increasing sales](https://www.financedigest.com/the-ultimate-excel-sales-tracking-templates-for-businesses.html "The Ultimate Excel Sales Tracking Templates For Businesses") growth using various marketing solutions online. Creating [strategic partnerships](https://www.financedigest.com/token-inc-announces-strategic-partnership-with-virtusapolaris.html "Token, Inc. Announces Strategic Partnership with VirtusaPolaris") 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 agency](https://www.iconquer.com/ "https://www.iconquer.com") 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](http://djkit.com/), UK Property Finance, Serimax and also supported UK doctors, solicitors and property developers, gain more exposure online. Craig has gained a wealth of [knowledge using Google and is committed to creating new opportunities and partnerships](https://www.financedigest.com/dispelling-the-myths-of-university-business-knowledge-transfer-partnerships.html "Dispelling the myths of university-business Knowledge Transfer Partnerships")

**This is a Sponsored Feature.**


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---