‘Nightmare’ home improvement project saved by a second mortgage.
When they needed more money to finish an ambitious refurbishment project on their new family home, entrepreneur Oliver and self-employed doctor Joanna felt trapped by the ultra-low rate on their existing mortgage.
The idea
Taking advantage of both a low mortgage rate that was fixed at 1.4% for five years and a post-COVID Stamp Duty holiday, the couple bought a five-bedroom, three-bathroom detached home just outside of Oxford.
The countryside property, in easy commute of London, just needed a few improvements to convert it into the perfect family home.
But, the refurbishment coincided with the fallout of Brexit and supply chain issues, which caused the costs of materials to skyrocket. Oliver and Joanna had to borrow from friends and family to keep the project on track, before racking up a £90,000 debt on credit cards. It wasn’t enough to finish the needed improvements.
The couple faced a nightmare scenario where not only would they lose their dream family home, but they would be forced to sell the property in a condition in which it would be massively undervalued. They needed additional long-term funding from a lender.
Oliver approached his bank but, because he was on such a low mortgage rate, they were unable to offer a further advance at a higher rate or remortgage, leaving the couple with an uninhabitable home and mounting debts.
Oliver said, “We were trapped into a ridiculously good mortgage and tried to refinance, initially going back to our original lender, but no one would touch us. I can’t tell you the stress that I was under with credit cards, family debt and bridging loans to complete the house renovation.”
The enablement
Exasperated by the situation that he found himself in, Oliver approached a specialist broker, Capital Loans Ltd, to see if they could suggest a solution.
Paul Zammit of Central Loans Ltd said, “Oliver approached us with a need to access finance quickly. It was clear that they had adequate income from their employment and equity in the property to secure a second charge mortgage. We knew Together, which has flexible criteria, especially when it comes to supporting self-employed customers, would be happy to support them.”
After assessing the couple’s monthly self-employed income and recognising that the renovations so far had added to the property’s value, we were able to agree a second charge mortgage for £250,000 on a fixed two-year term.
Oliver and Joanna’s success story is one of several that we’ve included in our 2024/2025 residential property market report.
Find out how we also got the right results for a social housing provider, a downsizing retiree and a successful, self-employed company director.
The result
Oliver and Joanna were able to consolidate their accumulated debts, settle payments and finish the renovation, without disturbing their existing mortgage.
Now, with the works completed and a valuation of £1.3 million, the family is settled and happy in their dream home. The property features a new roof, solar panels, batteries, vaulted ceilings with a remodelled interior, and is complete with new wiring and replastered walls. Oliver plans to remortgage his first and second charge mortgages on a preferable rate in the next two years.
Together’s Intermediary Sales Manager, Sally Precious Ward said, “Oliver and Joanna faced a situation which isn’t totally unique. With many buyers taking advantage of low rate mortgages, the options to refinance the original loan can be limited. Having assessed Oliver’s case, we could see that a second charge deal, where the loan is taken on top of the original mortgage and secured against the property, would make funds available. We’re delighted that we could work together to help complete the project.”
Whether you’re a homeowner looking to fund your next big home improvement project, a broker seeking solutions for your self-employed clients, or a landlord improving your property’s energy efficiency, Together has a common-sense approach to lending and a plethora of products to help in a range of different scenarios.
Get in touch to see if we can provide a solution for your lending needs.
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