If you own a property that was mortgaged and not owned outright, could you still put that as security for a bridging loan?
This is a good question and a good opportunity to examine what I teach on the Ninja Investor Programme. The answer is ‘yes’, but let me explain more.
An unencumbered property is highly advantageous if liquid cash is not available or is preferred to be kept liquid for other uses. A first charge can be offered to remove the need to put down a deposit for a purchase and also can fund the refurb too.
Another option is to raise money on the unencumbered property to fully fund the purchase of a new property.
However, not everyone is in the fortunate position of owning a property with no mortgage on it. It’s far more common to own a property with a mortgage on it.
Some bridgers only entertain first charges and will not consider second charges on a property. However, there is a decent selection of bridge that will do second charges. Some will only do second charges if it is banded together with a first charge on a separate property, usually the one being bought.
Even fewer bridgers do a second charge loan in isolation, but this is still possible - you just need the right broker who is familiar with the idiosyncrasies of the various bridging lenders to match you up with the right one (and I can help you with that, just drop me a note).