Second charges coming of age

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With lenders offering lower rates and the majority of brokers charging lower fees, today’s second charge borrower has access to a very real alternative to a re-mortgage or further advance.

Indeed, second charges are having something of a renaissance. The renewed and growing interest from the intermediary market can be demonstrated by significant growth in both second charge loan volume and value during the past year.

Figures recently released by the Finance & Leasing Association reveal that second charge mortgage business increased in July by 21% in value and 23% in volume, compared with the same period last year.

What is more, consumers are beginning to gain awareness of the second charge option and to understand how it can assist them.

All of that said, a gap in understanding lingers, with a recent survey showing that many consumers remained either unaware or cautious of the sector.

Who can benefit taking out a second charge?

Second charge mortgages are not necessarily the best option for every client wishing to capital raise. Typically, they prove useful for clients who are:

  • Tied into a fixed mortgage with restrictive early repayment charges
  • Benefiting from an existing low mortgage rate
  • Being offered a further advance with a higher rate
  • Currently on an interest-only mortgage product
  • Being declined on affordability for capital raising
  • Wishing to capital raise for business purposes, inclu­ding deposits for buy-to-let mortgages
  • Recently self-employed or contract workers; or
  • Recently retired.

Second charges also offer criteria advantages, such as higher loan-to-value borrowing.

Like to know more?

If you would like to discuss your borrowing options please do make contact and one of our fully qualified advisers will be happy to assist.

Second charges are expected to increase

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A recent report has shown that more than half of self-employed small business owners expect to use alternative financing in the future rather than traditional high street lenders. The report showed more than 60% of those surveyed will be raising finance within the next 36 months.

Demand for second charge lending is well placed to continue going from strength to strength over the next few years as mainstream lenders struggle to evolve to adequately support the thriving small business community.

A second charge is a loan that is secured against the residential property alongside the mainstream mortgage. They are quick to arrange and very cost effective.

The small business man is increasingly turning to alternative lending sources as a traditional re-mortgage becomes more difficult to secure.

One such small business owner in Surrey said, “a second charge loan secured on my main residence was so easy and quick to complete and the costs involved were very reasonable”. “The loan was very quick to complete, and I didn’t need a solicitor which saved a lot of money”.

High praise indeed, but it’s not surprising when on average a “clean case” can complete in less than 16 working days and this is what makes this form of lending so attractive.

Second charge lenders have been quick to recognise this gap in the market and have responded with new and innovative lending ideas which are aimed at small businesses.

Second charge loans have a vast array of uses, also over the past 3 years interest rates have fallen significantly making this form of lending very attractive.

Like too know more?

If you require assistance raising funds please do contact one of our fully qualified advisers who will be happy help.

Second charge lending expands

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The majority of homeowner at some stage of ownership will want to raise extra cash for a venture they have in mind. Raising those funds can be very confusing as many people just do not understand what options are available to them. Ever more popular these days is to raise funds secured on the family home, known as a second charge which is a loan that sits behind the current mortgage secured on the property.

Getting advice

Very simply the best thing to do if you wish to borrow money is to get independent advice from a fully qualified broker, the independent broker will have access to all loans available to you and will guide you in the correct direction.

Second charge market  

Much has been said about the upward trend of the second charge sector over the past year. Brokers and clients alike continue to be surprised at how competitive the rates of interest are plus the wide range of products on offer.

Since the implementation of the Mortgage Credit Directive there has been a significant increase in lenders entering the second charge sector. These fresh players have helped to reduce annual interest rates through the increased competition they bring.

Currently the cheapest published rates on offer are just a little over 4% with some lenders offering the potential to secure even cheaper rates based on risk, second charges provide a valid alternative for clients looking to raise additional funds against their property.

Range of deals on offer

 

Not so long ago in the “seconds market” there was not even a fixed-rate option available, with every second charge product at the lender’s standard variable rate. The fact that discounted and fixed rates have been added to product ranges is testament to the progress of the sector in a relatively short period.

Help?

If you are looking to raise funds against your property please make contact and one of our advisers will be happy to assist.

Second charge completions hit new high

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A survey recently conducted has reported the fallout from Brexit has had little effect on the second charge lending market as 68% of loan applications resulted in an offer this financial year. This figure is 29% higher than the same period last year

The proportion of offers that subsequently resulted in a completion also increased to 82% this year compared to 68% last year. Brokers also experienced a significant 3% jump in the number of second charge enquiries they received than last year.

Research also found that the Brexit negotiations have not significantly affected the flow of customers through the overall second charge approvals process. It would seem the UK public do not see the Brexit situation as a reason to withhold their future planning.

A local broker in Sussex said, “When the Brexit vote took place lending dipped significantly but now second charges have become very popular”. “Since regulation in line with mortgage lending seconds have increased leaps and bounds”.

This form of lending is now hitting all the predicted levels from two years ago, as homeowners take advantage of the low loan rates on offer. The survey also stated importantly that borrowers much prefer this form of lending to the unsecured alternative.

A second charge loan is a serious alternative to a re-mortgage, with so many options open to the borrower it is highly recommended to seek professional advice. The lending market is a very confusing area for most borrowers so do seek advice from an independent broker as they will have access to all products available.

Can we help?

If you would like to know more about second charge lending and how it could assist you do make contact and one of our advisers will be happy to guide you.

Second charge loans surging ahead

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2018 is progressing well with brokers reporting a steady rise in both applications and completions compared to the same period last year. A broker in London commented, “seconds offer speed, flexibility and affordable interest rates for all homeowners wanting to raise funds”. “Since regulation lenders have reduced set up costs and interest rates”. “The homeowner is steadily gaining confidence in this form of fundraising”.

There are many advantages that a second charge loan offers, not least the quick turnaround time which can be as little as 15 working days (standard case). This, of course, is a great deal faster than a standard re-mortgage which can drag on for months and months.

Second charge lending is increasing its popularity month on month. When you compare the interest rates on offer to unsecured lending it is very evident why this form of fundraising is growing in stature.

Lenders have been quick to recognise the increase in popularity and have responded in a very positive manner with a wealth of new and innovative products.

This form of lending is specialised and if you wish to raise funds using the equity within your property do get qualified advice as a wrong move could prove very expensive.

Lenders are reporting the largest growth area of this type of funding is via the self-employed workforce which includes landlords (buy-to-lets). Raising funds for the self-employed or contracted worker can be a challenge indeed but second charges do offer far more flexibility, so they are worth exploring.

Can we help?

If you are considering raising funds on your property, please do contact one of our fully qualified advisers who will guide you in the right direction.