The two firms have produced a co-branded broker guide to educate advisers on the opportunities in the growing market.
The guide explains how landlords can release equity from existing properties using a second charge loan. The firms said this was an “increasingly valuable option” in a higher rate environment, where some borrowers might be reluctant to refinance.
It explains a range of use cases for second charge lending, including refurbishments, energy-efficiency upgrades, portfolio restructuring, tax liabilities, debt consolidation and deposit-raising for further acquisitions.
The firms said there was an opportunity in the £2.14bn second charge market, which currently serves fewer than 5% of BTL landlords.
Last year, Loans Warehouse partnered with Scroll Finance to pilot its BTL second charge product, with rates from 6.65% up to 75% loan to value (LTV). Loans range from £25,000 to £1m, with variable, two- and five-year fixed options, as well as Scroll Finance’s ‘flexi-fixed’ proposition, which aligns the second charge fixed period to the first charge.
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There is also a 12-month revolving home equity line of credit (HELOC) option for landlords requiring flexible drawdown staged projects, alongside multi-property loans allowing borrowing across up to 10 properties within a single facility.
Lending is based on rental income with no personal income requirement, and Scroll Finance will accept portfolio landlords, limited companies and special purpose vehicles (SPVs).
Up to 10 properties can be used as security on one loan, and houses in multiple occupation (HMOs) with up to six beds will be accepted. No stress test will be applied to the existing first charge mortgage.
John Webb, head of lending at Scroll Finance, said: “BTL second charge lending remains one of the most under-served areas of the mortgage market, and working with specialist distributors like Loans Warehouse is key to changing that. Many landlords are sitting on significant equity but are understandably reluctant to give up a favourable first charge rate in today’s environment.
“Our products are designed to solve that problem, giving landlords access to capital quickly and simply, without disrupting what’s already in place. Loans Warehouse understands this space and has the expertise to help brokers identify where a second charge is the right solution for their clients. We’re pleased to be working together with Loans Warehouse to bring this opportunity to a wider audience.”
Matt Tristram, co-founder of Loans Warehouse, said: “We’ve launched this partnership with Scroll because there is still a huge untapped market for BTL second charge loans. Too many landlords and brokers overlook the flexibility these products can offer, whether for improvements, EPC works, business purposes or portfolio growth, all without losing a competitive first charge rate.
“With pricing starting from 6.65% and a genuinely flexible proposition, we’ve already seen great success working with Scroll. This latest completion shows exactly why we believe there is a real opportunity to raise awareness and drive adoption across the broker market.”
