Flexible Second Charge 'Overdraft' Facility for Auction Purchases

The Scenario

An existing ERG Finance client was seeking a faster and more flexible way to expand their buy-to-let portfolio. Their strategy involved acquiring properties at auction, renovating them, and refinancing onto buy-to-let products to extract equity for future purchases.

While traditional bridge-to-let options were available, some auction transactions required completion in less than 28 days - meaning even bridging finance wasn’t always fast enough. The client needed a flexible funding line that was immediately accessible and didn’t interfere with their existing mortgage arrangements.

The Challenge

The client’s main residence was already mortgaged with HSBC at an exceptionally low interest rate. Remortgaging would have meant giving up a highly attractive product - an unnecessary and costly move. In addition, the client had reached borrowing limits with their current lender due to standard affordability criteria.

A conventional solution simply wouldn’t meet the brief.

The Solution: Home Equity Line of Credit – Second Charge

ERG Finance sourced a second charge Home Equity Line of Credit - a flexible facility that works much like an overdraft, secured against the client’s main residence.

With a HELOC:

• The client is approved for a total facility upfront (in this case, £250,000)

• Funds can be drawn down instantly as needed - ideal for auction purchases

• Interest is only payable on the amount drawn, not the total facility

• The client can repay and redraw multiple times, making it perfect for short-term purchase/refinance cycles

• Crucially, the product came with no early repayment charges, allowing the client to repay quickly after refinancing each property

This facility allowed the client to act decisively at auction, without sacrificing the terms of their main mortgage or being restricted by affordability caps.

Conclusion

By arranging a this type of second charge facility, ERG Finance provided the client with fast, flexible capital to acquire, refurbish, and refinance properties on their own timeline. This revolving credit approach eliminated the delays and rigidity of traditional development finance and empowered the client to build their portfolio with confidence.

If you are building a property portfolio and need a bespoke funding solution, we’d be happy to help.