Why borrowers add security
- To fund a purchase with little or no cash deposit, using equity in property you already own
- To borrow more than a single property supports at the lender's maximum loan to value
- To improve terms, as a lower overall loan to value can bring a lower rate
- To keep a chain break moving, with the bridge secured on both the home being bought and the home being sold
See how much deposit you need for how lenders treat deposits.
How the lender sizes the loan
The lender values each property and applies its loan to value limits to the total, taking account of any existing mortgages. A property with a mortgage can usually only be offered as a second charge, which lenders treat more cautiously, and the first lender's consent may be needed. See second charge bridging.
For illustration only: a buyer purchasing a £300,000 property who owns a flat worth £200,000 with no mortgage offers both. Against a combined £500,000, a gross loan of £300,000 is 60% loan to value, so the purchase price could be funded largely by borrowing, with costs met separately. Actual limits depend on each lender, the valuations and your circumstances.
Costs and paperwork
Each property needs a valuation, title checks and a registered charge, so legal and valuation costs rise with every property added. Properties owned in different names, or by a company and an individual, need each owner to sign and may need independent legal advice. Leasehold properties may need the freeholder's notice of the charge.
Getting charges released
Agree at the start how each charge comes off. Many lenders will release a property early if the remaining security still supports the outstanding balance, sometimes on payment of a set amount. Without that agreement, the additional property may stay charged until the whole loan is repaid, which can delay a sale or refinance of that property.
The risks
Cross-charging spreads the risk of the loan across every property offered. If the exit fails, the lender can enforce against any of them. If one of the properties is your home or a family member's home, the loan is likely to be regulated, and the lender will assess affordability and the repayment plan. We will tell you at the outset how your case will be handled.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Compare lenders
Appetite for additional security varies widely between lenders, as do release terms. Use Instant Quotes to compare lenders whose criteria fit and apply online, and see large bridging loans for multi-property cases.
Common questions
Can I use another property as a deposit for a bridging loan?
Often, yes. Offering equity in another property as additional security can replace some or all of a cash deposit, subject to the combined loan to value.
Can a property with a mortgage be used as additional security?
Usually as a second charge, and the first lender may need to consent. Lenders allow less borrowing against second charge security.
Can one property be released before the loan is repaid?
Many lenders agree partial releases if the remaining security still supports the balance. Agree the terms before completion.
Is cross-charging more expensive?
Rates may be lower if the overall loan to value is lower, but valuation and legal costs rise with each property added.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
