Why a second charge loan?

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Second charge lending has many uses and one of the advantages of this type of loan lies in its flexibility.

It may be the case that those who need to raise funds are not aware they can do so through a second charge which is, of course, where advisers and brokers come in.

This type of lending can be suitable for a far wider range of situations than many realise.

A second charge mortgage provides an extremely useful alternative where consumers want to raise additional funds but do not want to change their existing first charge mortgage.

For example, it could be used to fund home improvements, for loan consolidation and paying for a deposit and removal costs for a son or daughter moving into their first home.

Helping the kids

Parents are increasingly helping their children onto the property ladder by lending them money for their first home. Young people find themselves stuck in a cycle of renting and being unable to build up enough cash for a deposit on their first home.

According to recent research, parents or the Bank of Mum and Dad, will be involved in nearly 30% of property transactions taking place in the UK market this year.

The findings show parents will lend more than £6bn in 2018, providing deposits for over 250,000 mortgages, and helping family members to purchase homes worth £70bn.

If you wanted to use a second charge loan the list below are typical reasons why.

  • Locked into a fixed rate mortgage
  • Have an interest only mortgage – and want to keep it.
  • Have a lifetime tracker mortgage at an advantageous rate.
  • Need the money quickly and a re-mortgage will take too long.
  • Withdrawals from the ‘Bank of Mum and Dad’, to help children through university or onto the property ladder.
  • Need to release equity from a buy-to-let and don’t satisfy high street rental calculations.

Can we help?

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

Borrower’s turning to second charges

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Borrower’s turning to second charges

With tougher lending rules now in force, more homeowners are turning to a “second charge” loan to fund home improvements, such as extensions, or consolidate debt. Industry figures show a 27.5% rise in the sums borrowed this way in the six months to the end of December 2017.

The rise in second charge borrowing (secured loan) – so called because the lender is second in line for repayment behind the main mortgage provider if a borrower’s home is repossessed – has been fuelled by rising house prices and the squeeze on household budgets. As homeowners become more aware of this form of lending and its flexibility so the figures have increased.

Homeowners should be aware this type of loan will NOT suit everybody, and it is highly recommended to seek professional advice. 

What’s the attraction of a second charge?

Mortgage rules have become stricter in the past couple of years, with lenders applying tougher “stress tests” to make sure borrowers can meet repayments if interest rates rise. So you may not be able to secure extra funds from your original lender. Some lenders consider certain borrowers too old or too risky to increase their lending.

Some borrowers also prefer to leave an existing mortgage in place because they would lose an attractive interest rate if they re-mortgaged, or there might be a steep exit penalty for switching. By taking out a second charge loan with a new provider, the first mortgage is unaffected, but you need to tell the original lender. You must have enough equity in your home to cover it.

A second charge loan may suit borrowers who have had payment problems, for example, due to job loss or illness. These homeowners are often refused an increase on their first mortgage, but a specialist second charge lender may take a different view.

Also, importantly more can be borrowed with a loan secured on a home than with an unsecured loan. Personal loans from high street banks are usually limited to £25,000.

Like to know more

A second charge loan will not suit everybody so it’s very important to get professional advice. We have qualified advisers waiting to help so please do make contact.

Flexible secured lending

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Second charge lending has many uses and one of the advantages of this type of loan lies in its flexibility.

It may be the case that those who need to raise funds are not aware they can do so through a second charge which is, of course, where advisers and brokers come in. This type of lending can be suitable for a far wider range of situations than many realise.

A second charge mortgage provides an extremely useful alternative where consumers want to raise additional funds but do not want to change their existing first charge mortgage – especially if there would be additional costs in doing so.

There are some very clear benefits a secured loan can offer when used correctly, which could well improve borrowers 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.

Suitable for you?

  • Fast completion
  • Low-interest rates
  • No need to change original mortgage
  • Vast amount of uses
  • Total flexibility
  • Loan terms to suit majority of needs

Second charge lending has so many benefits it is worth checking out whether this may suit your needs. Do ensure you seek professional advice as there are so many options.

Need some help?

Please don’t hesitate to contact if you require any assistance raising funds, one of our advisers will be happy to assist.

Loan choices increase

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It is, without doubt, secured lending popularity is increasing daily. Second charge mortgage completions have increased at a rapid rate over the last 2 years since regulation.

This type of lending is quick and easy if you own a property, lenders are increasing their product portfolios at a rapid rate. An average case presented will complete in approximately 17 working days and sometimes even less. As you can see this is so much quicker than the standard re-mortgage, please do bare in mind this type of loan is not always suitable for all situations.

We are seeing different lending plans emerge on a monthly basis and this can only be good news for the borrower. Interest rates and fees are reducing as lenders see this market as a growth area in the longer term.

The biggest growth area of loans is to the self-employed and the good news is there are many different plans to suit each individual case. Loans can be fixed for various terms which can give peace of mind or you may wish to just take the standard variable rate.

This is a rapidly expanding area of lending and products are increasing to match the demand. It is vitally important you research the market to get the best plan to meet your needs, not only now but in the future.

Need some assistance?

If you think this type of loan could assist you in your future planning it is very important to ensure you get the correct deal to suit your needs. There are many different lenders offering numerous second charge loans so please do call our advisers who will be happy to help you achieve the correct loan for you.