Could a second charge loan help you?

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There are several reasons why a second charge mortgage might be worth considering:

  • If you’re struggling to get some form of unsecured borrowing, such as a personal loan, perhaps because you’re self-employed.
  • If your credit rating has gone down since taking out your first mortgage, re-mortgaging could mean you end up paying more interest on your entire mortgage, rather than just on the extra amount you want to borrow.
  • If your mortgage has a high early repayment charge, it might be cheaper for you to take out a second charge mortgage rather than to re-mortgage.

Points to consider

Before you decide on a second charge mortgage, it’s a good idea to get advice from a suitably qualified mortgage adviser. They will be able to help you find the loan that best meets your needs and financial situation both now and in the longer term. They will have to follow the rules as set out by the FCA when dealing with you. These rules are designed to protect you.

If you choose not to get professional advice, you run the risk of taking a loan that isn’t suitable and this could cost you thousands extra in interest payments.

When you’re looking into a second charge mortgage, make sure you:

  • Approach your existing lender and ask them what they would charge for an additional loan.
  • Find out the exact mortgage terms, fees, early repayment charges and rates of interest.

Help required?

If you would like to know more please do make contact and one of our fully qualified advisers will be happy to guide you.

Sound solid increase in business for second charges

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The value of new business for second charge mortgage lending was £242m in the three months leading up to November last year, 11% more than the year before.

There were well over 5,000 new agreements in the three months to November, an increase of 7.2% on the previous year. The market saw £80m of second charge business in November alone, an increase of 3.7% year-on-year.

The second charge mortgage market reported further sustained growth in December, and in the first 11 months of 2017, new business volumes increased by 13.8% compared with the same period in 2016.

Lenders remain focused on fully embedding the new regime, which sees first and second charge mortgages regulated on the same basis. This has helped highlight the benefits a second charge loan can have too many borrowers around the Country.

Broker benefits

Due to the second charge market growing so quickly lenders have produced many new and innovative products to suit most needs. With the loan choices available it is highly recommended for potential borrowers to seek broker advice, a wrong move without advice could cost thousands extra in interest payments. A professionally qualified broker will assess the client needs and recommend the appropriate products accordingly.

Can we help?

A second charge loan will not always be the best advice, please do make contact and one of our fully qualified advisers will be happy to explain the options open to you.

Second charge loans can be very helpful

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Years gone by second charge mortgages may have been overlooked or consciously excluded from the options considered by mortgage intermediaries for clients looking to capital raise. The alignment of regulation has led an increasing number of mortgage advisers to explore more deeply the options available to their clients, and with good reason.

In a sustained low-interest-rate environment, there has never been wider availability of low-cost borrowing options for those seeking to re-mortgage.

However, there are groups of borrowers who may need to raise finance but would be financially disadvantaged from the prospect of re-mortgaging away from their current deal.

Interest-only existing mortgage focus

Interest-only mortgage borrowers often find themselves between a rock and a hard place when it comes to further borrowing especially if they want to retain their existing terms. If they re-mortgage, there is a strong possibility they will have to sacrifice their interest-only mortgage. Many borrowers these days can get a nasty shock when they attempt to apply for a further advance from many mainstream mortgage lenders. A practice widely applied by mortgage lenders either requires the borrower to provide proof of their exit strategy for repaying the interest-only loan, or a conversion of their existing mortgage borrowing as well as the new loan amount onto a capital and interest basis. This situation in many cases makes raising capital a non-starter, leaving the client frustrated. This is where a second charge can be a vital alternative.

Second charge to the rescue

A second charge loan would enable them to retain the bulk of their borrowing on an interest-only basis and on their existing terms, whilst taking out the additional mortgage on a repayment basis. With over 3.3 million interest-only mortgages in the UK, a second charge could potentially be of enormous benefit to this group of borrowers.

Can we help?

If you are looking to raise capital against the value of your property please do contact us and one of our advisers will be happy to assist.

Time to clear that debt?

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Second charge loans can be a very useful facility for managing overspending and could help resolve debt problems that may have built up over the years. Christmas time always brings extra stress on the family budget, a second charge low cost loan could help elevate some of these problems.

So, if you are thinking of reviewing your borrowing it would be a very good idea to consider a second charge. Please be aware this type of funding will not suit everybody and it is strongly advised to seek professional help before making a final choice.

For those borrowers on a favourable mortgage deal with the first charge lender, they can keep that deal and use a second charge loan to pay off or consolidate their other debts.

Second charge loans in the majority of cases will complete much quicker than a re-mortgage which can prove vital in certain circumstances.

There are some very clear benefits a secured loan can offer when used correctly which could well improve the customer’s long term financial prospects. Although consolidating debt is not always the right answer, a secured loan is often a suitable option given the lower interest rate charged when compared to an unsecured loan.

There is little doubt that this form of lending will continue to grow as it has done over the last few years. The majority of borrowers are waking up to the fact that unsecured lending is far too expensive both in the short and longer term.

Help required?

We have a team of fully experienced advisers waiting to assist you. Please do make contact and start to repair your finances for 2018.

 

Why are second charges growing so quickly?

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In these challenging times of financing, it has become more important to be able to complete a deal within a set timescale. Second charge finance has grown in status year on year and is going from strength to strength since regulation.

A second charge delivers funding quickly and efficiently which is something high street and private banks just cannot do at a competitive rate. A recent survey of home owner’s clearly shows the most important ingredient in funding a deal is speed and ease of completion. The survey also showed that traditional lenders are taking too long to get funds released and deals falter due to this reason.

A second charge can be secured on a property and “sits” behind any first charge mortgage both on private and buy-to-lets. A loan without complications can be completed within 14 working days which is considerably less than a re-mortgage.

This time of year always puts pressure on the family budget, so if you are thinking of reviewing your finances do consider a second charge if a loan is required. Interest rates and conditions are very competitive when compared to a traditional mortgage.

There is little doubt second charge lending has had its most successful year. The good thing about this is the lenders have taken this on board by expanding products to meet the challenges.

These are indeed very progressive times for the second charge finance market as the industry looks forward to 2018.

Need help?

If you wish to raise a loan secured on a property you own please do make contact and one of our advisers will be happy to assist.