Second charge bridging loan helped secure investment deal for buyer

Somo has completed a second charge bridging loan that enabled a borrower to purchase a £500,000 property for £350,000, clear historic mortgage arrears and secure a buy-to-let investment opportunity.

The seller was relocating overseas and needed a quick sale so was prepared to accept £350,000 for the property. The buyer, however, didn’t have any liquid funds available and had also built up six months of mortgage arrears after taking time away from work to care for an elderly relative.

Somo used its Second Charge product against the borrower’s main residence, enabling the borrower to clear the mortgage arrears and release sufficient capital to complete the purchase of the discounted property which had been independently valued at £500,000.

Three months since completion, the property is being used as a rental property, generating a strong rental income. The borrower remains up to date with their mortgage payments and is progressing towards a long-term buy-to-let refinance, creating a self-funding investment with both income and capital growth potential, Somo says.

A focus on the wider picture

Somo’s underwriting director Rob Johnson, said the deal underlined the value of such financing. “At Somo, we look beyond credit blips and focus on the wider picture. In this case, the borrower had experienced temporary financial difficulties while caring for a family member but had returned to work and resumed their commitments.

“By taking a common-sense view of the circumstances and recognising the strength of the opportunity, we were able to clear the arrears, facilitate the purchase and help the borrower secure a property with substantial equity from day one.”