Specialist lender Somo has completed a £651,000 second charge facility to refinance a mixed-use rural holding in Worcestershire, enabling a local trading business to redeem an outgoing lender and avoid potential default penalties.
The borrower, who operates from a 2.38-acre site comprising a residential dwelling alongside workshop, office and warehouse buildings, required a structured refinance after their existing second charge facility no longer suited their needs.
The primary objective was to redeem the outgoing lender while maintaining day-to-day trading continuity.
The mixed residential and commercial nature of the asset added complexity to the transaction, requiring careful consideration of occupation arrangements and the structure of security. The site was valued at £1.65 million.
The new facility was arranged at 65% loan-to-value, sitting behind an existing first charge held by Santander, with consent obtained.
The proceeds were used to redeem the outgoing second charge lender, although the redemption relied on funds from two separate sources.
Somo agreed to provide part of the overall redemption sum, with additional funds from a secondary source due to arrive 72 hours later. That timing gap created a risk that the borrower could fall into technical default if the outgoing lender did not release its charge on receipt of partial funds.
According to Somo, its underwriting director engaged directly with the outgoing lender to agree terms under which the charge would be released once Somo’s funds had been received. This allowed completion to proceed without triggering default interest or penalty fees.
Somo’s solicitors also formalised the lease and occupation arrangements across the residential and commercial elements of the property to ensure clarity of security.
The remaining funds were received shortly after completion and the outgoing lender was repaid in full, in line with the agreed structure.
The transaction was supported by an established trading history and a verified projected income of £160,000. The exit strategy is a six-month open market sale of the property, which is currently being marketed at £2 million.
The lender said the refinance enabled the borrower to avoid disruption to trading and a potentially costly default scenario, while strengthening the security structure on what it described as a slightly unusual mixed-use rural asset.
