Bridging lender Somo has completed a second charge bridging loan that enabled a borrower to purchase a £500,000 buy-to-let property for £350,000, clear six months of mortgage arrears, and secure a below-market-value investment with substantial equity from day one.
The seller was relocating overseas and needed a quick sale. Although the property was independently valued at £500,000, they were willing to accept £350,000 to clear their own mortgage and fund the move. The borrower, however, had no liquid funds available and needed to raise the full purchase price quickly before the opportunity was lost.
Complicating the picture, the borrower had accumulated six months of mortgage arrears after stepping away from work to care for an elderly relative. Although they had since returned to work and resumed payments, the arrears remained outstanding, creating an adverse credit position that ruled out conventional financing.
The borrower needed a solution that would clear the arrears, raise the full £350,000 purchase price, and complete the transaction before the seller moved on. Somo structured a second charge against the borrower’s main residence, taking the view that the discounted purchase price reflected the seller’s personal circumstances rather than any underlying issue with the property itself.
With an independent valuation confirming market value at £500,000, Somo was comfortable lending against that figure. The second charge released sufficient capital to clear the outstanding arrears and complete the purchase.
The completed deal delivered across every objective: arrears cleared, purchase completed, and a clear route established to refinance onto a long-term BTL mortgage. Three months on, the borrower is up to date with payments and the property is generating rental income, with a long-term buy-to-let refinance now in progress, positioning the investment for both income and capital growth.
“At Somo, we look beyond credit blips and focus on the wider picture,” said Rob Johnson, underwriting director at Somo (pictured).
“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.”
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