A client was managing a mortgage of approximately £4 million secured against their primary residence. The mortgage, held with a mainstream lender, was on a competitive interest rate. However, the borrower also had a secondary loan secured against the property, which had reached the end of its term and carried a double figure interest rate. The borrower sought a solution to refinance the second charge at a lower interest rate while avoiding disruptions to the existing mortgage.
A potential option was to remortgage the property and consolidate both the primary mortgage and the second charge into a single loan. However, this approach was not feasible due to substantial early repayment charges on the existing mortgage. Additionally, the primary lender was unwilling to offer further borrowing beyond the current loan.
To address the borrower’s needs, a refinancing option was identified with a new second charge lender. This allowed the borrower to replace the expired second charge loan with one at a significantly lower interest rate, with an attractive fixes period.
The new arrangement featured a competitive lender fee. Additionally, the lender accepted a recently completed property valuation, avoiding the need for a new appraisal, and further reducing costs for the borrower.
This solution allowed the borrower to manage their finances more efficiently, securing a substantially lower interest rate on the second charge loan while maintaining their existing mortgage and avoiding penalties.
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