When you apply for a bridging loan, the lender will place a ‘charge’ on your property. In finance, a ‘charge’ is a legal distinction that prioritises which lender gets paid out first should you fail to repay your loan.
If you do not have any other finance secured against your property, you will qualify for a first charge bridging loan. With this type of plan, the lender of the bridging loan has priority and will be the first to receive a pay-out if your property is sold to repay your outstanding debt.
If you already have finance secured on your property, such as an outstanding mortgage, you will take out a second charge bridging loan. In this instance, your mortgage lender will have priority and will be repaid first, before the bridging loan lender, in the event of your financial failure.