In 2021, Tapton Capital was approached by a prominent Malaysian businessman who owned a luxury townhouse in Belgravia, valued at £5,000,000. With a first-charge mortgage of £2,500,000 from a Middle Eastern bank, the borrower needed to raise £250,000 to ease business cash flow.

He had secured heads of terms for a second charge bridging loan but faced a roadblock when the first-charge lender refused consent for a second charge. T

Tapton Capital stepped in, sourcing an ultra-high-net-worth private lender to provide an equitable charge loan.

Within 7 working days, the £250,000 loan was funded without the need for a new valuation, relying instead on one completed six months prior. Solicitors were instructed the same day, and the borrower successfully repaid the loan within six months.

This case demonstrates the flexibility and speed equitable charges can offer when conventional routes are blocked, allowing clients to access funds quickly in critical situations.

Conclusion

For borrowers, Equitable charges provide a flexible, albeit more expensive, solution for borrowers needing to tap into property equity when other options aren’t available. They offer an alternative route to secure finance without disrupting existing first charge arrangements but come with risks, including higher interest rates and potential breach of first charge mortgage contract

For high-net-worth individuals, property investors and developers, equitable charges can be invaluable tools, but they require careful consideration. By understanding the benefits and challenges, borrowers can make informed decisions, balancing the flexibility of accessing equity with the risks associated with these charges.