First Charge Security
A first legal charge gives the lender priority over all other creditors. If the borrower defaults, the first charge holder has the primary right to repossess and sell the asset.
When borrowing money against a property, lenders require security. This is registered as a 'legal charge' at the Land Registry. The priority of these charges dictates who gets paid first in the event of a default and repossession.
A First Charge holder is at the absolute top of the hierarchy. If the property is sold by receivers, the First Charge lender recoups 100% of their capital, interest, and legal fees before anyone else sees a single penny.
Second Charges
If you take out a bridging loan for refurbishment while leaving the original mortgage in place, the bridging lender will take a 'Second Charge'. This is far riskier for the lender, as they only get paid from whatever equity is left over after the first charge lender has been satisfied, which is why second charge loans carry much higher interest rates.