Kwame, a self-employed builder, borrows £60,000 to buy plant and a van for his business, secured by a second charge on the home he lives in. His home already has a first mortgage. Which statement about the second charge loan is correct?
The Regulated Activities Order 2001 (RAO) art 61A(1) excludes a 'second charge business loan' from the regulated mortgage contract definition. Under art 61A(6) that is a loan meeting the art 61 conditions where the credit exceeds £25,000, the mortgage ranks behind one or more other mortgages, and the borrower takes it wholly or predominantly for business purposes. Kwame's £60,000 loan meets all three. Had it been £25,000 or less, it would be a regulated mortgage contract. Consumer buy-to-let concerns let property, not business borrowing.
Forgetting the art 61A exclusion and treating every loan secured on a home as regulated.
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