£145,000 second charge bridge clears landlords’ arrears

Somo has completed a £145,000 second charge bridging loan for two portfolio landlords, allowing them to clear mortgage arrears on their buy-to-let properties, remove a restriction on their title and gain time to sell two properties.

The lender used its Landlord Breathing Space Second Charge product and secured the second charge bridging loan against one of the borrowers’ rental properties. Substantial equity sat behind a modest first charge, and the planned sale of other portfolio assets gave the loan a clear exit. 

The borrowers jointly own a small residential portfolio and had fallen behind on mortgage payments across their buy-to-let properties. Unpaid management company charges had also triggered a restriction on one of their titles at HM Land Registry.

Adverse credit on their files left the borrowers struggling to find a mainstream lender. They needed funds to bring the mortgages up to date and settle the management charges before the situation escalated, while giving themselves time to sell part of the portfolio on their own terms rather than under pressure.

Somo took security over one of the borrowers’ residential investment properties, which carried an estimated value of £460,000 and an existing first charge of £65,000. That left enough equity for Somo to lend on a second-charge basis without disturbing the first-charge mortgage. 

The 18-month term cleared the buy-to-let arrears and brought the accounts up to date, settled the management charges and removed the title restriction. The first charge mortgage stays in place, and the borrowers can now sell two properties with the aim of achieving full market value. Somo has an asset-backed route to repayment through those sales. 

“Arrears don’t always tell the full story,” said Jade Keval, chief operating officer at Somo (pictured).

“Here we had experienced landlords with real equity in their portfolio and a sensible plan to sell two properties. What they needed was time, and the arrears were making that time very expensive.”

“By taking a second charge behind a low first charge mortgage, we were able to clear the arrears, deal with the title restriction and give the borrowers the breathing space to sell properly rather than in a rush,” she added. “That’s exactly the kind of situation our second charge lending is designed for.”