Second charge loans gain momentum

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Several lenders have claimed an increase in the second charge loan market suggests economic uncertainty is causing more people to improve their current property rather than move.

Data shows there has been an 8.4% increase in people applying for second charge finance in the first quarter of 2021, when compared to the same time in 2020.

Figures also show that 51% of these second charges were applied for to make home improvements rather than sell to upgrade.

In addition, UK Finance has reported a 11% increase in re-mortgage applications in April 2021 compared to the same period last year. This is reinforced by the ONS reporting in their May House Price Index that the rate of increase in UK house prices is over 5%.

With an increase in re-mortgage applications, slump in the UK housing market and uncertainty around our economy due to covid-19 could suggest more people are choosing to improve their current properties – rather than take a potential financial risk of moving.

Growth in the market reinforces the fact there are plenty of opportunities in the current climate for second charges. It’s important to consider seconds as a solution for a refinancing or home improvement rather than just re-mortgage.

Key to this is to get professional assistance as borrowing money these days offers so many options and can be very confusing.

Help required?

If you are looking to take out a new loan please do make contact and one of our independent advisers will be happy to assist.

Second charge loans are seeing good times

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The latest figures for the second-charge market, from the Finance & Leasing Association (FLA), make for positive reading. It found that the value of new business for April came to £88m, the most positive month for new lending in a year, while the number of new loan agreements is now unchanged from last March. It is an encouraging demonstration of how the market has picked up from the difficulties posed by the pandemic.

There is no escaping the fact that lenders in the second-charge market are raising their game and revamping, not only by product, but also by the way they lend.

Some are competing on price, unveiling new product ranges that are genuinely eye-catching on rate alone, while others are looking again at their lending criteria and identifying ways to open up their products to groups of borrowers who might ordinarily be excluded from the seconds’ sector.

What’s happening across the board, even from those lenders who aren’t adjusting their products, is a wholesale improvement in the level of service on offer.

Whether it’s greater use of technology or simply a revision in their lending processes, the industry as a whole is doing a fantastic job in looking at how it works with fresh eyes, and finding new, innovative ways of delivering a more efficient and satisfying experience for everyone involved in each case.

Compare the market today to the seconds market we saw just a few months ago, and the difference is extraordinary.

This is a market where the lenders are not just open for business, they have a particularly strong appetite to lend, and are launching products that opens up this sector to a wider range of prospective borrowers.