Going from strength to strength

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There were 1,945 new second charge agreements in January this year, up 18% year-on-year, the Finance and Leasing Association (FLA) has found.

In the three months to January there were 6,015 new second charge agreements, up 18% from the previous year. In the 12 months to January there was 23,829 new agreements, up 8% year-on-year.

The value of new second charge business was £85m in January 12% more than the year before and £264m of new business in the three months to January, up 13% year-on-year.

The second charge mortgage market has made an impressive start to 2019, with new business up 12% by value and 18% by volume in January, compared with the same month in 2018. This is a strong performance, and as most of the market is broker-introduced, it also suggests that knowledge of second charge mortgages among clients is growing very quickly.

One of the big appeals of a second charge loan is the costs and speed of completion. On average a second charge loan is completed within 15 working days, this does of course vary dependant on the complexity.

There is little doubt second charge lending has just had its most successful year, the good thing is lenders have taken this on board and reacted positively to meet the challenges.

Need some assistance

If you think this type of loan could assist you with your future planning make sure you get the right one to suit your needs. There are many different lenders offering numerous second charge loans so please do call our qualified independent advisers who will be happy to help.

 

 

 

Second charge range growing

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There Is little doubt that second charge lending popularity is increasing on a daily basis. Second charge mortgages have increased this year month on month and continue to do so as more people become aware of just how advantageous they can be.

This type of lending is so easy and quick to secure lenders are increasing their portfolios at a rapid rate. An average case presented will complete in approximately 14-21 working days, as you can see this is so much quicker than the standard re-mortgage.

Different lending plans are emerging daily and this can only be good news for the borrower. Interest rates and fees have reduced considerably as well as lenders see this market as a growth area in the long 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.

 

 

Economic uncertainty drives second charge market

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Increases 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 8.9% increase in people applying for second charge finance in the second half of 2018, when compared to the same time in 2017.

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

In addition, reports show a 9.2% increase in re-mortgage applications in January 2019 compared to the same period last year. This is reinforced by the ONS reporting in their December House Price Index that the rate of increase in UK house prices is 2.1%, the lowest UK annual rate since August 2013.

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

It could be that Brexit worries are flattening the property market, meaning fewer people are moving and more homeowners are making improvements to their current properties rather than move during a time when it is still unclear how Brexit will affect property prices.

If you are looking to raise funds it’s important to consider a second charge as a solution for a refinancing or home improvement.

Like too know more?

Our advisers are fully trained and skilled in all areas of lending so please do contact us to discuss any requirements you may have.

 

 

 

Average borrowing increases

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According to figures from the Finance and Leasing Association (FLA), the average second charge loan size has increased from around £25k ten years ago to around £45k now.

The loan-to-value of around 60-65% on a second charge loan hasn’t changed much over the last ten years though, so it is higher property values which have enabled the loan size increase.

Average repayment terms requested at the outset are around 15 years, although most will probably redeem within about four to five, and two thirds request a fixed rate product giving them surety of their repayments for the fixed period – important when Base Rate is expected to rise further in that period. Even with a fixed rate, having no early repayment charges means the borrower can refinance whenever circumstances suit, without penalty.

Re-mortgage v Second charge

So, why would one opt to take the second charge route rather than re-mortgage?

Lots of reasons actually. For example, many customers have a really good first mortgage deal, maybe a great fixed or tracker rate that they don’t want to give up. Taking a second charge at a higher rate may mean that the blended rate across the whole debt is still lower than a new first deal; so a second charge loan can make good financial sense.

Some borrowers may face a stiff early repayment charge on their first mortgage if they re-mortgage totally. Others may have had a change in their circumstances which means switching to a bigger first charge mortgage is not an option. Perhaps they started a family or changed jobs resulting in a different source of income. Let’s not forget, second charges can be considerably quicker to complete than re-mortgages.

Like to know more?

If you would like to know more about second charge loans please do make contact and one of our advisers will be happy to assist.

Second charge lending increasing momentum

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The number of loan applications increased by nearly 23% in the quarter ending December 2018 compared to the Q3 ending September 2018. This year has continued on the upward trend as consumers become more aware of how a second charge loan could benefit them.

It would seem the UK homeowners are very keen to reduce expensive debt (credit cards and un-secured loans) so as to free up monthly funds.

Benefits of second charge lending?

  • Faster to complete than a traditional re-mortgage.
  • Normally less fees.
  • Very attractive interest rates.
  • Loans are very flexible.
  • Ability to retain current mortgage deal if on a low rate.
  • Self-employed and contract workers

Choosing a lender

There are an increasing number of second charge lenders entering the market and choosing one can be a minefield, getting professional independent help selecting is highly recommended.

A broker will take time to understand your needs and be able to place your application with the lender matching your requirements. This is vital as selecting the wrong loan or lender could be very expensive in the long term.

Like too know more?

Our advisers are fully trained and skilled in all areas of lending so please do call us to discuss any requirements you may have.

 

 

Very encouraging growth

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The finance and leasing association has released data that shows the second charge market expanding on a yearly basis for the sixth month in a row.

In December 2018, there were 1,702 new agreements valued at a total of £80m, growth of 13% and 6% against December 2017, respectively.

This is some way off November’s data, however, when 2,319 new agreements valued at £99m provided a 21% rise for both metrics. In the 12 months leading to December 2018, 23,529 new agreements were recorded at £1.07bn in value. This is a 7% upward change in new agreements within that time frame, and a 4% increase in the value of new business.

December saw the market report its sixth consecutive month of growth, contributing to solid single-digit new business growth in 2018 as a whole. The second charge mortgage market is expected to see further single-digit new business growth in 2019 overall.

It is believed that the sector is more likely to grow at a measured pace rather than a “boom & bust” situation, backed by the increasing numbers of advisers who are now aware of where secured loans can sit in their advice process.

If you look closely at the positives a secured loan can offer a borrower, then it is easy to see why this form of lending is being welcomed by all.

Lender choices

The last 12 months has seen a substantial increase in the number of loan types available to a property owner. Not only this but new lenders have entered the market which has to be good for the long-term growth and stability of the second charge industry.

The broker

These days due to the vast choices open to the prospective borrower it is vital they get a professional adviser to point them in the right direction. With so many loans and re-mortgages available anybody contemplating taking out a loan would be very well advised to seek broker advice.

Can we assist?

If you would like to discuss your future and present borrowing needs, please do make contact and one of our qualified advisers will be pleased to help.

Home renovation?

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Home improvements were the most popular reason to take out a second charge loan in 2018 research has found.

Almost half (48%) of customers used some of the funds unlocked from their property towards enhancing homes and gardens.

These figures demonstrate the flexibility of a second charge as a tool for financial planning in retirement, both as a means to unlock wealth in the immediate term and with a view to the future. It is significant how many people are untapping the value of their property to fix-up their home or increase their comfort and security as they grow older.

This significance is even clearer when seen in the context of the latest data, which shows the amount spent by 50-74-year-olds on alterations to their house is at its highest level since at least 2010.

Taking out a second charge to fund home and garden improvements benefits more than just the current occupiers. Such enhancements can add value to the property and help pass on wealth to future generations.

There’s a slight rise in the number of customers who used a second charge loan for home improvements in Q4 2018 (47%) compared with the same quarter in 2017 (46%). Although these figures did not reach the high of Q3 2018 (50%), home improvements continue to be the most popular use for second charge lending.

Elsewhere, more than one in four people used a second charge to manage unsecured debts in 2018 (26%). Last year’s final quarter figure for unsecured debt was also the same as 2018 as a whole, rising slightly from 25% in Q3 2018.

Other popular uses for second charge loans among UK households in 2018 was holidays (22%), day-to-day living (21%) and gifting to family (16%).

Like to know more?

If you would like to know more about second charge loans please do make contact and one of our advisers will be happy to assist.

 

Second charge rates remain competitive

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For the time being second charge interest rates are likely to remain at their all-time lows. If you are considering a new loan now could be the time to make your move as things could be changing soon.

Second charge loan interest rates have been tumbling for months now. This type of loan could be used as an alternative to a re-mortgage if it fits your lending criteria. Second charge lending is growing in stature and is now a very serious alterative to the once traditional re-mortgage.

Second charge mortgages can be particularly useful when a homeowner wants to raise additional funds but does not want to change their existing first mortgage – especially where this involves additional costs.

Lenders have seen the potential growth in this area of raising funds and have responded well by offering competitive short and long-term packages to suit the majority of requirements.

This form of loan will not suit everybody, but it is without doubt worth exploring with the advice of a qualified adviser. Remember this is a secured form of lending and therefore will in most cases be far cheaper than an unsecured loan.

These days the choices of loans open to homeowners is vast and it is vital to get the correct one to suit your needs. Making the wrong choice could prove to be very expensive over the longer term so do seek professional advice.

Need some assistance?

If you think this form of loan could assist you in your future planning it is very important to ensure you get the correct advice. There are many lenders offering numerous second charge loans, please call one of our advisers who will be able to guide you in the correct direction.

 

Very sound performance

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The latest numbers from the finance and leasing association reveal that second charge mortgage business volumes grew in November and December 2018 when measured on an annual basis.

There were 3,782 new agreements in the month, up by 21% compared to the same months last year.

This brought the total number of agreements in the 12 months in December to 24,724, 6.8% growth overall.

The value of new business in November 2018 alone came to £99m, a fall of 4.8% compared to the previous month’s £104m of new business, but when looked at on a yearly basis, an increase of 21%.

In the year to December 2018, £1.08bn of second charge business was completed, a yearly increase of 4.7%.

The market has reported a relatively strong performance in recent months following a steady first half of 2018.  The second charge mortgage market is likely to report solid single-digit new business volumes growth in 2019 overall as this form of lending increases in popularity.

Optimistic

The market is cautiously optimistic that this increase will continue this fiscal year, but it is important that brokers and homeowners are aware of the range of specialist financing options on offer.

A second mortgage continues to be a useful option for customers seeking to raise additional funds without wanting to change their existing mortgage. To find out more you should always contact a professional adviser as the options available are vast and varied.

Can we help?

If you are looking to raise funds secured on your property please do make contact and one of our advisers will be happy to help.

 

 

Raising a loan – Self-employed

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It has always been more difficult for self-employed people to get a mortgage compared to salaried employees. For that matter, 2nd charge loans have historically been somewhat harder to obtain for the self-employed as well.

At the heart of the issue is a tendency among self-employed individuals to not be able to satisfy loan companies looking to placate their own fears that the borrower will not be able to make good on his or her loan. The good news is that things are changing – at least where second charge loans are concerned.

Second charge lenders can do a lot more to help the self-employed than primary mortgage lenders because they have much more flexibility. They are finally taking advantage of that flexibility to find ways to better serve self-employed borrowers. Even more encouraging is the fact that lenders are coming up with many more specialised products.

The self-employed when borrowing money have always been limited to the choice of loan available, but this is changing all the time. It is highly recommended to get expert advice as the loans available vary in so many ways and it is important to get the correct one for your needs in the long term.

Lenders are changing the way they do business in order to better serve self-employed applicants. For example, one specialist lender indicated that it had reduced its tax calculation requirements while others are changing their income criteria to make it easier for borrowers to document their income.

Need help?

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