Bridging lender Somo has completed a second charge loan enabling a borrower to acquire a buy-to-let property valued at £500,000 for £350,000, whilst simultaneously clearing six months of mortgage arrears.
The transaction involved a seller relocating overseas who required a quick sale. Despite an independent valuation of £500,000, the seller accepted £350,000 to clear their existing mortgage and fund their relocation.
The borrower lacked liquid funds and faced complications from six months of accumulated mortgage arrears, incurred whilst caring for an elderly relative. Although the borrower had returned to work and resumed payments, the outstanding arrears created an adverse credit position that prevented access to conventional financing.
Second charge structure
Somo structured a second charge against the borrower’s main residence, lending against the property’s independently confirmed market value of £500,000 rather than the discounted purchase price. The lender attributed the price reduction to the seller’s personal circumstances rather than property-related issues.
The second charge released sufficient capital to clear the outstanding arrears and complete the purchase. The borrower is now current with payments and the property generates rental income, with a long-term buy-to-let refinance in progress.
The deal structure reflects broader activity in the buy-to-let sector, where investors continue to seek opportunities despite tightening lending criteria. Meanwhile, specialist finance providers have expanded their role in facilitating transactions that fall outside mainstream lending parameters.
Rob Johnson, underwriting director at Somo, said: “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.”
Market implications
The transaction demonstrates the role of bridging finance in enabling property acquisitions where timing constraints and credit histories prevent conventional mortgage approvals. The borrower secured immediate equity of £150,000 based on the difference between purchase price and market valuation.
Three months following completion, the borrower has maintained payment schedules and is progressing towards standard buy-to-let refinancing, which would replace the short-term bridging facility with a conventional mortgage product.
