Client raises £128k for tax bill via second charge mortgage

Our introducers’ client had recently purchased a new home in need of urgent refurbishment.  They had used funds that had originally been set aside for their tax bill to complete the works.  The client also receives a substantial annual bonus from their employment.

The client needed to raise £128k within a short period of time on a newly purchased and refurbished property.  The property had an estimated value of £1,050,000 and an outstanding mortgage of £680k; this took the overall LTV to 77% including their capital raising requirements.

We discussed the merits of the application with several of our lenders and managed to obtain an agreement in principle at a variable interest rate of 5.9% with no early repayment charges.  This enabled the client to replace the funds needed for the tax bill and to use their bonus income to reduce the outstanding balance over the coming years.

In order for this to be agreed the lender set the following requirements:

1. Applicant must provide evidence of the home improvements that were carried out
2. Applicant to provide confirmation that the shortfall for the tax bill was a one-off event
3. Applicant to confirm what provisions are in place to meet future tax bills.

This shows, yet again, how a second charge mortgage facility can be utilised where a traditional remortgage or further advance does not provide a viable solution.

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