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What to do when the first charge lender declines to consent for the second charge

A second charge mortgage case study

Objective

Our introducer enquired about a case where the client was looking to raise an additional £30,000 on a buy-to-let property for home improvement.  The property had a current value of £600,000 with an outstanding mortgage of £310,000 on an interest rate of 0.7% above Bank of England base rate for the whole of term.

 

Obstacle

The applicant was able to raise the additional funds by remortgage. However, this would involve losing the low lifetime tacker currently in place.  This was not an attractive option for the client given his currently low monthly payment. In addition, the first charge lender did not provide consent to a traditional second charge.

Outcome

We were able to provide a second charge on the property using an equitable charge. This loan was secured at 5.97% on a capital and interest repayment basis and allowed the client to continue with the low interest product on the first charge and complete his home improvement.

 

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