- Client: High-net-worth individual
- Existing Mortgage: Circa £4 million
- Purpose: Refinance an existing second charge
- Facility: New second charge loan
Enness was approached by a high-net-worth client with a mortgage of approximately £4 million secured against their primary residence. The existing mortgage was held with a mainstream lender on a competitive interest rate. However, the property also had a second charge that had reached the end of its term and was now carrying a significantly higher, double-digit interest rate.
The client wanted to refinance the second charge onto more competitive terms while retaining their existing first charge mortgage. Avoiding unnecessary disruption to the primary mortgage was particularly important, given its favourable rate.
One option considered was to remortgage the property and consolidate both facilities into a single loan. However, this was not viable because the existing first charge mortgage carried substantial early repayment charges. The primary lender was also unwilling to provide the additional borrowing required to refinance the second charge.
Enness therefore explored the specialist second charge market to identify an alternative solution. We sourced a new second charge lender that was comfortable replacing the existing facility without requiring the client to disturb their primary mortgage.
The new facility provided the client with a significantly lower interest rate and an attractive fixed period. The lender also offered a competitive fee structure and was willing to rely on a recently completed property valuation, meaning a new valuation was not required. This helped reduce the costs associated with arranging the new facility and allowed the transaction to progress efficiently.
By refinancing the second charge separately, the client was able to replace the higher-cost borrowing while retaining the existing £4 million mortgage and avoiding the substantial early repayment charges that would have resulted from refinancing the entire property.
This case demonstrates how second charge mortgages can provide an alternative to a full remortgage where a borrower wants to raise or refinance additional borrowing without disturbing an existing first charge facility. For clients with competitive first-charge mortgages, this can be particularly relevant when the cost of replacing the existing mortgage would outweigh the benefits of consolidating the borrowing.
Enness works with a range of specialist lenders to structure finance around the client's existing borrowing and wider circumstances. Where a standard remortgage is not appropriate, alternative lending structures may provide a more suitable route, subject to the lender's criteria and the client's circumstances.
If you are looking to refinance a second charge or raise additional capital without disturbing an existing mortgage, speak to a mortgage specialist to discuss your requirements.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, affordability, valuation, underwriting and lender criteria. Terms and availability will vary depending on individual circumstances. Failure to meet repayment obligations could result in the loss of the property used as security.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
