United Trust Bank (UTB) has completed a £58,000 second charge mortgage for a couple looking to use the funds to pay off a Help to Buy equity loan.

The value of the couple’s home had increased significantly since they took out the equity loan five years ago, but the amount of the loan that needed to be repaid had increased proportionately, too.

Equity loan borrowers aren’t required to pay any interest on the debt for the first five years, but in the sixth year they pay 1.75% interest and for each subsequent year it is 1.75% plus the rate of inflation based on the RPI, plus another 1%.

As a result, the couple discussed their options with their credit intermediary, who is an approved introducer for UTB.

The couple established that they had adequate income to support a second charge loan to repay the equity loan before they had to start making any interest payments on the equity loan.

The finance also meant that they would benefit from 100% of any further increases to the value of their home.

UTB received the application together with proof of income by way of the last two years SA302s for applicant one, who as a sole trader could evidence that his income was both at a consistent level and sustainable.

The lender received payslips for applicant two, and once it received the valuation report, it could issue the binding offer.

On receipt of the original signed mortgage deed, UTB was able to send the funds to the solicitor dealing with the repayment of the equity loan on the applicants’ behalf.