Save your clients money with a third charge

Picture the scenario where your client wishes to capital raise but there is a second charge in place which they don’t want to clear.

Examples include:

• Primary Factor: A CCJ registered on land registry where no repayments are required.
• Second Element: A charge registered by HRMC
• Third Aspect: A charge registered to secure a private family / business debt.
• Additional Point: A charge registered to secure an interest in a marital split.
• Fifth Consideration: A charge registered by second charge lender which is no longer lending (e.g. Firstplus)

Often these arrangements are not interest bearing or at low rates and clients can be forced in to paying them off in order to raise additional cash. That means borrowing more than they need and paying more interest.

Here’s our solution.

We have developed a new product with one of our lenders which will accept a third charge behind debts of this nature up to 75% LTV.

In most cases they don’t need consent from the second charge holder and will just need confirmation of the limit to borrowing.

Case study

A client recently wanted to raise £30,000 and another broker was forcing them to settle a £25,000 CCJ.

Key Criteria & Application Guidance

This took the total borrowing to £55,000, all of which was at a relatively high rate due to the CCJ.

We left the second charge relating to the CCJ in place – saving them any interest payments on £25,000.

Because they then only needed to borrow £30,000 they could afford to repay the loan over a shorter period.

End result

• They borrowed £25,000 less – no interest charged on this.
• They borrowed over a shorter term – reducing the interest paid on the remaining £30,000
• Existing second charges remained in place.

Scenarios of this nature are quite common and often the best advice is to leave the second charge in place.

Now you can accommodate these through Promise.

One note of caution – our lender is unlikely to take a third charge behind bridging lenders or second charge term lenders with aggressive arrears charges.

www.promisemoney.co.uk

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