For years, running a successful property portfolio followed a predictable cycle: buy an asset, take out a standard bank loan, and roll it over at expiry.
Today, more investors are turning to revolving credit facilities to unlock equity from existing assets without incurring additional charges or disrupting core debt. A high volume of transactions has created a tight refinancing bottleneck, meaning traditional bank timelines do not always align perfectly with fast-moving market opportunities.
Over the past 18 months, high street banks have been flush with deposits. To deploy this liquidity, they priced risk competitively, but this aggressive return to lending backfired operationally. Inundated with volume, traditional institutions face a severe administrative backlog, causing clients to miss vital acquisition deadlines and maturity windows.
The scale of this issue is immense: more than £30bn of UK commercial real estate loans are due for refinancing in 2026 alone. While lending rates have softened, credit policies have tightened. For a borrower locked into a term, attempting to exit early to capture new equity can introduce substantial early repayment charges (ERCs).
This underscores why alternative second-charge structures are becoming increasingly popular as a complementary option. This is precisely why alternative second-charge structures are gaining traction; they allow borrowers to unlock capital without triggering a full, expensive refinancing process that eats into portfolio margins.
A revolving credit facility works differently from a standard term loan. Rather than drawing down a fixed sum once, the facility serves as an ongoing line of credit, secured against existing assets, that can be drawn, repaid, and redrawn as opportunities arise.
Crucially, it can usually be arranged as a second charge, meaning the investor’s existing senior debt and its terms remain untouched. It is less a one-off loan and more a standing reserve of liquidity the investor controls.
The top-up problem
The challenge isn’t a total lack of money, but a lack of flexibility when investors want to leverage existing assets for new growth. High street banks happily lend the bulk of the cash for standard, vanilla properties, but they lack the appetite to fund unusual assets or provide the extra leverage needed to capture fast-moving opportunities.
This introduces distinct operational paths: investors facing elongated approval timelines as they wait for traditional credit committees, and those who expand their options by using alternative funding lines to unlock cash in under four weeks.
Moving money horizontally
To optimise growth in this climate, many professional investors are moving away from viewing property loans as strictly vertical arrangements locked behind one front door. Success relies on moving equity horizontally across a business.
I recently worked with a borrower managing 17 residential properties who spotted a site to develop speculative industrial units. Their existing first-charge lender refused the development exposure. Instead of abandoning the project, we bypassed the main bank by structuring a flexible second charge across the residential portfolio, raising up to 70% of the current market value.
This released an additional 40% of fresh capital for the industrial build while simultaneously establishing an ongoing revolving credit facility. The client now has a continuous liquidity line for future schemes, all while leaving their high street debt entirely undisturbed.
An alternative to mezzanine layers
This fluid approach also changes how developers fund the final piece of the puzzle. When a senior lender funds 90% of a build, finding the remaining 10% causes massive friction. While mezzanine finance remains a standard tool for securing higher leverage, it often introduces complex secondary compliance and intercreditor layers. An alternative route worth considering is leveraging assets outside the immediate business. On a recent scheme, we secured a short-term first charge against the borrower’s main residence to release that 10% gap up to 75% loan-to-value (LTV). It cut out expensive junior debt and kept the build structure clean.
The path forward
For brokers, the shifting landscape means the standard lending toolkit needs to expand. Investors increasingly look for versatility, combining main residences, retail, or offices under one agreement. These mid-market setups provide flexible capital to bridge short- to medium-term funding gaps, offering rapid 24-hour drawdowns once established and removing exit fees after an initial three-month window.
While traditional refinances will always have their place, navigating the current market requires a wider range of options. Incorporating flexible structures like revolving credit alongside traditional debt gives investors a valuable alternative when navigating market complexity.
Sam Beaumont is finance advisor at FRP Real Estate Advisory