Are you seeing demand for second charges for business purposes?

Marie Grundy, Managing Director, Second Charge Mortgages, West One Loans

Second charges can be used for a variety of loan purposes including business purposes in the right circumstances. At West One we will consider lending to established businesses on a referral basis for self-employed borrowers who have a proven business track record. They may want to invest in their existing business, for example, to buy new machinery or premises. Other scenarios we see are where professional self-employed applicants such as lawyers, dentists or doctors, have the opportunity to become a partner in their business. We will not, however, consider loans for start-up businesses or investment speculation.

In addition to our normal underwriting requirements, we will take into account the current and previous business performance and how our loan will contribute to the ongoing success of the business. We will also take into consideration the level of experience of our borrower in their particular field and assess whether the new borrowing is likely to adversely impact on future earnings which could affect the long-term affordability of the second charge mortgage.

The security for our loans is the borrower's residential home or buy-to-let property, as we do not participate in commercial second charges where the security is the business premises. We always recommend independent legal advice. This is important for business loans particularly where there is a joint application but only one borrower has an interest in the business.

The loan term can be taken up to 30 years dependent on the applicants age and there are a range of product options available including variable and fixed rates with a range of early repayment options including the ability to make overpayments.