Overdraft Facility Against Property

We recently supported a client by arranging an overdraft facility against property, designed to provide them with the flexibility and confidence to expand their property development activities. By securing the facility against their main residence using a second charge, the client was able to release equity without the constraints of traditional mortgage affordability assessments, instead relying on the future potential of their property development ventures.

The client’s challenge

Our client, an experienced property developer, faced a common difficulty. Although they had substantial equity tied up in their home, their income profile did not fit the standard criteria for borrowing via traditional mortgage lenders. What they needed was a solution that would allow them to access funds swiftly and flexibly, enabling them to seize investment opportunities as they arose, without the need to constantly renegotiate complex loan agreements.

Our tailored solution

We advised the client on securing a second charge overdraft facility, structured to operate much like a commercial overdraft, but specifically geared towards the property development sector. This facility provided them with a revolving credit line that they could draw down from when required, and just as easily repay as profits were realised or refinancing options became available.

Unlike standard bridging loans, which typically incur professional and legal fees each time they are set up, this facility required professional fees only at the outset. This created a more efficient and cost-effective solution, removing the hassle of restarting a whole funding process after each project was completed. You can read more about how these solutions work in practice via this related overdraft facility case study.

How the overdraft facility works

The overdraft facility was structured to deliver maximum flexibility:

• Drawdown on demand: Funds could be accessed quickly when a suitable plot of land or property became available, allowing the client to negotiate from a position of strength.
• Flexible repayments: The facility allowed funds to be repaid in full or in part without penalty, reducing interest costs between developments.
• Interest efficiency: Only minimal non-utilisation costs were due when the facility was not in use, with full rates applying only when funds were drawn down.
• Debt-free investment properties: Since the borrowing was secured against the client’s home rather than the development asset itself, each new project remained unencumbered, leaving scope to raise separate facilities for construction finance if needed.

Conclusion

For property developers who have substantial equity tied up in their homes but whose financial profile does not align with traditional mortgage borrowing, an overdraft facility against property can be a transformative solution. It provides a cost-effective, flexible way to fund multiple projects, leaving investment properties debt-free and enabling developers to raise additional finance for build costs separately.

This facility not only helps property developers act quickly when opportunities arise but also creates long-term efficiency by avoiding repetitive set-up costs. Ultimately, it’s a tool that turns the equity in a main residence into a working asset, providing the liquidity and responsiveness needed to grow a property portfolio with confidence.

If this scenario resonates with you or you’re seeking personalised mortgage advice for another situation, please get in touch — we’d be happy to see how we can help. Call us on 0800 980 8777 or email info@privatefinance.co.uk.

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Disclaimer:

The information presented in our case studies is intended for illustrative and marketing purposes only. Some case studies may be based on multiple enquiries or hypothetical scenarios to demonstrate typical processes or outcomes. Not all case studies represent completed business transactions, and the inclusion of a case study does not imply that the business was successfully concluded.