The Client
The clients were a married couple who owned their residential home and two buy-to-let properties. The husband was self-employed and the wife a homemaker. The clients had multiple overdrafts almost up to their limits, a credit card at its £14,500 limit, and had taken out unsecured loans on top of this. Their disposable income was in a negative position. Without fast action, their credit files would be affected, jeopardising future mortgage applications or leaving them facing very high rates.
The Scenario
The clients wanted to remortgage one of their buy-to-let properties, which had a fixed rate of 2.6% due to end in 2026. Their existing lender had no early repayment charge during the fixed rate period, but with market conditions at the time, remortgaging immediately would have roughly doubled their rate. A solution was needed to protect that low rate while still consolidating their unsecured credit into a manageable repayment.
The Solution
We arranged a second charge mortgage for the clients, secured against one of the buy-to-let properties. This protected their existing 2.6% rate on the first charge while raising capital to settle the unsecured credit.
The clients raised £43,000 via the second charge, self-funded from the rental income on the property alone. The second charge lender was happy to use the funds to consolidate the unsecured credit in full.
This reduced their monthly outgoings from £1,010 to a more comfortable £348 a month. The clients moved out of a negative disposable income position into one with room for everyday costs and unexpected expenses.
The second charge was arranged on a two-year fixed rate, timed to align with when the existing 2.6% rate on the first charge ends in 2026. Settling the unsecured credit now also puts the clients in a stronger position for their remortgage options once both fixed rates expire, without risking damage to their credit file in the meantime.
Summary
Even with significant unsecured credit and negative disposable income, solutions are often available through specialist lenders willing to look at the full picture rather than a single credit score.
Frequently Asked Questions
Can I raise a second charge mortgage against a buy-to-let property?
Yes, second charge lending is available against buy-to-let property as well as residential homes.
Lenders will usually want to see that the rental income can support the additional repayment, either alone or alongside the client’s other income.
Why use a second charge instead of remortgaging the buy-to-let property?
A second charge protects an existing low rate that would otherwise be lost on a full remortgage.
This matters most when market rates have risen since the original fixed rate was secured, since remortgaging early can mean a significantly higher rate on the whole balance, not just the new funds.
Can unsecured debt be consolidated into a second charge mortgage on a buy-to-let property?
Yes, this is one of the most common reasons landlords use a second charge.
Lenders will assess the full picture, including existing borrowing and rental income, before agreeing to consolidate unsecured credit this way.
Should a second charge fixed rate match the first mortgage's end date?
Aligning the two end dates lets both be reviewed or remortgaged together without triggering an early repayment charge on either.
Where the two run to different dates, refinancing one before the other often means paying a charge on whichever is still inside its fixed term.
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist second charge panel and will tell you which lenders will engage with your deal, what LTV and rate to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Buy-to-let and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Second Charge Mortgages – raising capital while protecting your existing mortgage rate
- Buy-to-Let Mortgages – whole-of-market advice for landlords across the UK
- Second Charge Mortgage Calculator – estimate borrowing and monthly repayments
- Buy-to-Let Mortgage Calculator – estimate borrowing and monthly costs before you apply