£6.4M Property Portfolio Secures £1.4M Second Charge Bridging Loan for Refurbishment

The client required circa £1.4 million of refurbishment finance to complete works on a luxury holiday let after funding the initial phase from personal savings. The client also owned a main residence, with the two properties valued at circa £6.4 million and carrying existing mortgage borrowing of circa £2 million.

The remaining funding was needed to complete the refurbishment to the required standard before the holiday let could begin generating income. The challenge was not simply raising additional capital. The finance also needed to preserve the client's existing mortgage arrangements and reflect the timing of the remaining refurbishment costs.

A second charge bridging loan allowed the client to raise additional capital while leaving the existing first-charge mortgages in place. Refinancing the existing borrowing into a larger bridging facility would have replaced mortgages already held on existing terms and potentially increased the overall cost of funding.

The second charge structure therefore provided a way to raise the required refurbishment finance without disturbing the client's existing mortgage arrangements. This was particularly important because the holiday let was still being refurbished and was not yet generating income.

Retained interest and a two-stage drawdown aligned the facility with the client's cash flow and refurbishment programme. The client did not need all the capital immediately, while the holiday let would not generate income until the works were complete, making regular interest payments less suitable for the circumstances.

The staged structure meant funds could be accessed as they were required rather than drawing the entire facility at the outset. Retaining the interest within the facility also meant the client did not need to service monthly interest payments during the refurbishment period. Retained interest does, however, reduce the net funds released and increase the total amount repayable at the end of the term.

The starting total loan-to-value in this completed case was circa 70 per cent, reflecting the property's value while significant refurbishment works remained outstanding. The lender considered how the position was expected to change as the works progressed, with the total LTV anticipated to fall below circa 50 per cent by the second drawdown.

This was a case-specific lending decision rather than an indication that the same LTV or terms are generally available. The transaction required a lender willing to consider the client's existing borrowing, refurbishment programme, expected property value and proposed exit together rather than assessing the initial LTV in isolation.

The circa £1.4 million second charge bridging facility was structured with two drawdowns, retained interest and no early repayment charges in this completed case. This allowed the client to access funds in line with the refurbishment programme while preserving the existing first-charge mortgages and maintaining flexibility around the eventual refinance.

The structure was designed around how and when the client actually needed the capital, rather than providing the full amount at the outset. According to Bridging & Development Lenders Association data, second charge completions among participating lender members totalled £101.1 million in Q2 2026, compared with £131.3 million in Q1 2026 (published September 2026).

The planned exit was to refinance the completed holiday let onto a longer-term holiday let mortgage, while leaving the existing mortgage on the client's main residence in place. This would repay the short-term second charge facility once the refurbishment was complete and the property was ready for longer-term financing. Having a defined exit was an important part of structuring the transaction.

The absence of early repayment charges in this completed case also meant the bridge could be repaid once the refurbishment and subsequent refinance were ready, rather than requiring the client to remain in the facility unnecessarily.

If you own property with existing borrowing and need short-term capital for refurbishment, Enness Global can assess whether second charge bridging finance may be appropriate for your circumstances.

Finance is subject to status, lender criteria, property valuation and satisfactory due diligence. The terms achieved in this completed case are specific to the client's circumstances and should not be treated as an indication of terms currently available to other borrowers.

Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only. Past outcomes are not a guide to future results.