14 August 2026 | Written by Julie Meehan
Case study: How a Homeowner Business Loan Funded Childcare Business Growth
An established childcare business owner wanted to raise capital to invest in and grow the business.
Mercantile Trust arranged a £246,885 second charge Homeowner Business Loan over an 18-month term. Most of the funds were allocated to the childcare business, with a smaller amount used to repay an existing second charge.
The case at a glance
- Loan amount: £246,885
- Loan type: Second charge Homeowner Business Loan
- Purpose: Business investment and expansion
- Term: 18 months
- Interest: Rolled up
- Monthly interest rate: 0.99%
- Legal fees: None
- Early repayment charges: None
- Discharge fee: £245
The challenge
The customer needed to release a significant amount of capital to support the continued growth of an existing childcare business.
Alongside the business investment, a small proportion of the loan was required to repay an existing second charge secured against the property.
The customer needed a flexible short-term solution that provided enough time for the business investment to take effect, while allowing the loan to be repaid early if their circumstances changed.
The solution
We arranged an 18-month second charge Homeowner Business Loan for £246,885, with interest rolled up over the term.
As the borrowing was secured as a second charge, there were no legal fees to pay. This helped reduce the customer’s initial costs and allowed more of the available funds to be directed towards the business.
Although the facility was agreed over 18 months, the customer can repay it at any time. Interest is only charged up to the date the loan is repaid, and there are no early repayment charges. A £245 discharge fee applies when the loan is redeemed.
How will the loan be repaid?
The customer’s main exit strategy is to refinance their home before the end of the 18-month term.
Several backup options were also identified. These include refinancing the customer’s buy-to-let properties or repaying the borrowing using profits generated by the childcare business.
Having more than one credible exit strategy provided additional flexibility if the original repayment plan changed.
The result
The £246,885 facility gave the customer access to capital for investment in their established childcare business while also consolidating the existing second charge.
The rolled-up interest and flexible repayment terms meant the customer didn’t have to make monthly interest payments and could repay the loan early without an early repayment charge.
Could a Homeowner Business Loan help fund your business plans?
A Homeowner Business Loan may allow you to raise funds against your residential property for a range of business purposes, including expansion, equipment, premises or working capital.
Every application is individually assessed based on the customer’s circumstances, the proposed use of funds and the planned exit strategy.
Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured against it.
This case study is based on an individual application. Lending decisions, rates and terms are subject to eligibility, valuation and full underwriting.
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