When May A Second Mortgage Be Required?

If your business is looking to borrow funds such as by way of a commercial mortgage then the lender will usually require one or more forms of security. This could be a first legal charge over the business premises plus a personal guarantee either unsupported or supported by a second mortgage.

Potentially, a second mortgage could be provided on a residential property to provide extra security to meet a request for a commercial mortgage.
It may be possible to arrange a commercial mortgage by providing the additional security of a personal guarantee supported by a second mortgage over a residential property in addition to a first legal charge over the business premises.

In the case of the legal mortgage over the business premises, the lender will require a certain security margin for the amount your business wishes to borrow in relation to the forced sale value of the business premises so that its risk is as low as possible. If that security margin is not sufficient then the lender may be agreeable to you providing additional security.

This additional security could be a personal guarantee from yourself supported by a second mortgage over your residential home. Quite simply, the lender providing the commercial mortgage could take a second mortgage over the matrimonial home that would rank behind the lender that provided the mortgage for you to buy your residential home and as security it took a first legal mortgage over the residential home. This would increase the security margin of the lender providing the commercial mortgage.

There are many providers of second mortgage finance so it is important that you obtain a competitive financial package taking into account not only the interest rate to be charged plus also such things as the term of the borrowing and the level of fees that could include things like an arrangement fee, valuation fee and security fee. In this respect, you will be pleased to hear that here at Commercial Mortgage Link we can put you in touch with a specialist mortgage broker who has a number of years experience in dealing with such matters and an extensive panel of lenders at his or her disposal. We look forward to hopefully being of assistance to you.

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