When opportunity knocks: Somo funds £350,000 purchase of £500,000 BTL property
29 June 2026
Somo has completed a second charge bridging loan enabling a borrower to purchase a £500,000 property for £350,000, clear historic mortgage arrears and secure a buy-to-let investment opportunity.
Using its specialist second charge expertise, Somo structured a solution against the borrower's main residence while recognising the strength of the below-market-value purchase.
Somo recently provided finance to enable a borrower to complete the purchase of a property at undervalue. The borrower needed to raise funds quickly to take advantage of this opportunity and used their residential property as security by way of a Second Charge.
The challenge
The seller was relocating overseas and needed a quick sale. Although the property was worth £500,000, they were prepared to accept £350,000 to clear their mortgage and fund their move.
The borrower, however, had no liquid funds available and required the full purchase price to complete the transaction.
Complicating matters further, they had recently built up six months of mortgage arrears after taking time away from work to care for an elderly relative. While they had returned to work and resumed payments, the arrears remained outstanding.
The borrower needed a solution that would:
- Clear existing mortgage arrears
- Raise the full £350,000 purchase price
- Secure the property before the opportunity was lost
- Work despite recent adverse credit
The property
An independent valuation confirmed the property's market value at £500,000.
Somo was satisfied the discounted purchase price reflected the seller's circumstances rather than any issue with the property, creating a genuine below-market-value acquisition with substantial equity from day one.
The solution
Somo utilised its Second Charge product against the borrower's main residence.
By taking a common-sense view of both the circumstances and the investment opportunity, Somo was able to clear the mortgage arrears and release sufficient capital to complete the purchase.
Having established the property's true value at £500,000, Somo was comfortable lending against that figure given the clear rationale for the discounted sale.
The outcome
The completed transaction delivered several key benefits:
- Mortgage arrears cleared and account brought up to date
- £350,000 purchase completed
- Significant equity secured from day one
- Investment opportunity preserved
- Clear route established to refinance onto a long-term buy-to-let mortgage
Three months after completion, the borrower remains up to date with their mortgage payments and the property is generating strong rental income. They are now progressing towards a long-term buy-to-let refinance, creating a self-funding investment with both income and capital growth potential.
Comment
Somo's Underwriting Director, Rob Johnson, 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.
"By taking a common-sense view of the circumstances and recognising the strength of the opportunity, we were able to clear the arrears, facilitate the purchase and help the borrower secure a property with substantial equity from day one."
