A SOCIAL housing provider has finalised an £18m refinancing deal that will save it more than £5m.

Two Castles Housing Association has refinanced 90 per cent of its loan portfolio and completed deals with both Abbey National Treasury Services and Barclays Bank.

It means the group, which has properties across County Durham and Tyne and Wear, will save more than £500,000 a year in interest payments, for the next 11 years.

Revised covenants and lower borrowing costs will also allow the association to borrow more of its potential £40m untapped loan capacity on top of its existing £20m loans. The cash will go towards its development programme.

Gill Boyd, finance director, said: "The transfer of an existing subsidiary back into the parent company gave the association an unparalleled opportunity to use cash reserves in revamping the loan book.

"The renegotiations have been a major success because it allows us to borrow more money for less security while saving significant amounts over the next eleven years."

Stephanie Murphy, operations director, said: "The annual savings will go towards what is most important to us - providing good quality and affordable homes to people in the communities that most need it."