Second Charge Bridging Loan for Business Funding with Missed Payments
A self-employed professional property investor with more than 20 years' experience needed approximately £100,000 of short-term business funding. Despite recent missed mortgage payments, Aura Capital structured a second charge facility at up to 70% combined LTV — with no monthly payments, no physical valuation, no separate legal costs and no upfront costs.
The Situation
The client was a self-employed professional property investor with more than 20 years' experience who required approximately £100,000 of short-term capital for business purposes.
The business had sustained a couple of years of losses due to lost income and was looking for fast funding to cover legal expenses associated with recovering income owed, while the balance was being used to progress planning on a separate plot of land.
Rather than taking more expensive business finance, which due to the recent missed payments would have cost in the region of 25–35% per annum, we structured a facility with no monthly payments using the available equity in the client's property.
A second charge bridging loan provided a more cost-effective way to raise the capital while allowing the existing first mortgage to remain in place.
The commercial rationale was straightforward: use the available equity within the client's property to meet a short-term business funding requirement, rather than taking significantly more expensive business finance.
The Complexity
The client's recent credit history included missed mortgage payments. Rather than this preventing the application from progressing, we selected a lender whose criteria accommodated the client's circumstances, experience, equity position and proposed repayment strategy.
There was also the question of consent from the existing mortgage lender for the new second charge. Because of the recent missed payments, we wanted to ensure the client's funding did not depend entirely on that consent being granted.
We therefore selected a lender that could consider completing by way of an equitable charge if formal second charge consent was unavailable. This provided an alternative route to completion and greater certainty around the client's required timescale.
The important point was certainty of funding. The consent process could be progressed alongside the application, while the equitable charge option provided a potential alternative route if formal second charge consent was unavailable.
How the Deal Was Structured
The facility was structured at approximately £100,000 at up to 70% combined LTV, with interest charged at approximately 1.30% per calendar month.
The existing first mortgage remained in place, with the additional capital raised against the available equity through a second charge bridging facility.
Interest was structured without monthly payments. This allowed the client to concentrate their available cash on the legal expenses and planning process rather than adding another monthly commitment to the business.
The facility could also proceed without a physical valuation, without separate legal costs and with no upfront costs, making it particularly well suited to a fast, short-term funding requirement.
The funding strategy was appropriate because the requirement itself was short term. The client expected to realise value from the separate land opportunity as the planning strategy progressed, providing a clear route to repay the facility.
The Numbers
| Borrower | Self-employed professional property investor |
| Experience | 20+ years in property investment |
| Facility | Approximately £100,000 |
| Charge | Second charge |
| Combined LTV | Up to 70% |
| Rate | Approximately 1.30% per calendar month |
| Interest | No monthly payments |
| Purpose | Business purposes — legal expenses and planning costs |
| Existing mortgage | Remained in place |
| Credit profile | Recent missed mortgage payments |
| Valuation | No physical valuation required |
| Legal costs | No separate legal costs |
| Upfront costs | £0 |
| Consent | First-charge lender consent progressed alongside application |
| Alternative structure | Equitable charge option available if required |
| Exit strategy | Capital expected from separate land and planning strategy |
| Product | Business-purpose second charge bridging finance |
The Outcome
Approximately £100,000 of capital raised
Existing first mortgage remained in place
Recent missed payments accommodated
No monthly payments
No physical valuation required
No separate legal costs
No upfront costs
Equitable charge fallback available
Why This Case Worked
The client had substantial property experience and available equity, but needed to access capital quickly following a period in which the business had suffered from lost income.
The recent missed payments meant conventional business borrowing was considerably more expensive, with indicative pricing in the region of 25–35% per annum. Rather than unnecessarily placing that level of borrowing cost onto the business, the available property equity provided a more cost-effective funding route.
The second charge allowed the client's existing first mortgage to remain untouched while providing access to approximately £100,000 of additional capital.
The structure also matched the client's cash flow. With no monthly payments required, the client could use the available capital for the legal action and planning process rather than servicing another monthly business commitment.
The first-charge consent process was progressed alongside the application. Selecting a lender capable of considering an equitable charge bridging loan also provided an alternative route if formal consent was unavailable, giving the client greater certainty around the required completion timescale.
For an experienced property investor with substantial equity, the second charge provided a cost-effective way to access capital already held within their property, rather than taking more expensive finance through the business or unnecessarily refinancing their existing mortgage.
Products Used in This Case
This transaction was structured using Aura Capital's second charge bridging finance capability, allowing the client to raise approximately £100,000 for business purposes while keeping the existing first mortgage in place.
The structure also included the ability to consider an equitable charge bridging loan if formal second charge consent was unavailable, providing an additional route to completion in suitable circumstances.
Need to Raise Capital Without Refinancing Your Existing Mortgage?
Whether you need short-term business funding, have recent missed payments or want to access property equity without replacing your existing mortgage, Aura Capital can structure second charge options around your circumstances.
Get a QuoteThis case study has been anonymised to protect client confidentiality. Figures have been rounded. Outcomes vary depending on individual circumstances and lender criteria. This does not constitute financial or legal advice.
