Many homeowners these days are looking for ways to raise capital which is safe, quick and cost-effective. Over recent years property values have increased year on year and the majority of home owners will be pleasantly surprised to see just what their property is now worth. In the majority of cases, it is more cost effective to raise a loan using the house as security even if you have a mortgage secured against it already. A personal loan from a bank as an example can be very expensive, a second charge loan really does offer a viable alternative,

As an example if your property is currently valued at £240,000 and your current mortgage is £100,000 you have £140,000 equity. There are many good quality lenders who would be interested in a second charge loan/mortgage on the equity within your home. The plus side of all this is the costs are affordable and can be set to your budget.

The plus points of a second charge mortgage

1          Your credit history may well not be so good now and you want to borrow to let’s say extend your current property, this could be the cheapest solution.

2          You may be self-employed and having problems raising finance, this route could be the perfect solution by utilising your property.

3          Repayment terms and periods are very much to your requirements, so they can be tailored to suit your budget.

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 right one to suit your long-term needs. There are many different lenders offering numerous second charge loans, please do call our fully qualified advisers who will be happy to help you achieve the correct plan for you.

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, there is a feeling amongst the experts this trend could soon be reversed.

Second charge loan interest rates have been tumbling for months now. A second charge 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.

One thing you should do if you are contemplating taking out a new loan is to consult an experienced professional adviser as this form on loan will not suit everybody.

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. More and more innovative products are coming onto the market all the time which has to be good news for the consumer.

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, please call one of our advisers who will be able to guide you in the correct direction.

More people than ever before are turning to a second charge mortgage to raise funds rather than taking out a personal loan or re-mortgaging.

 What is a second charge mortgage?

Second charge mortgages are becoming increasingly popular, with the number of people opting for one at its highest level since 2008. They allow you to borrow a lump sum secured against your property which you repay alongside your existing mortgage over a fixed term.

Many people use them to raise money as an alternative to a re-mortgage.

How do you qualify?

To qualify for a second charge mortgage you must be a home owner, although you don’t necessarily have to be living there. While a first charge mortgage is based on a number of factors, including your deposit, credit score and ability to pay each month, a second charge mortgage is based on the equity available in your property.

Equity?

This is the percentage of your home owned outright by you. You can work this out by calculating the amount you owe on your property against the value of it. So, if your property is worth £300,000 and you still have to pay off £200,000 on your mortgage, you have £100,000 in equity.

You don’t need to have a high credit rating, in fact you might even be able to get one with a low score. This is because lenders look more favourably on borrowers with a poor credit rating if they are prepared to borrow against their home. The typical minimum term is three years and the maximum is 30 years and they can be paid off alongside your existing mortgage. You can borrow from £1,000 (varies from lender to lender) upwards and the greater the equity in your property, the more you will be able to secure.

Like to know more?

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

An unsecured loan is not protected by any collateral or guarantee, so should you default on payments the lender can’t automatically take your property or assets. They can be offered to people who don’t own property and that makes them available to a much wider range of borrowers. They are flexible, and you can choose the amount and over what time period you repay your loan.

You can apply for an unsecured loan generally if you are aged over 18, irrespective of whether you are a homeowner, but you may be asked for a Guarantor who has a good credit history. The interest you pay back depends on the amount you borrow; the interest rates will normally be much higher than the secured loan option.

A secured loan generally can be advanced for car loans and mortgages, It’s often referred to as a homeowner loan or second charge because the debt is linked to the borrower’s property.

The amount you can borrow and repayment terms offered on a secured loan is linked to your personal circumstances and the amount of “free equity” you have in your property. Free equity is the difference between the amount you owe on your mortgage and the value of your property. As an example, if your property is valued at £200,000 and you have a mortgage of £100,000 your free equity is £100.000.

You can generally borrow more with a secured loan, it is likely to be at a lesser interest rate than an unsecured loan, but should you default on your payments you risk losing your property.

Important

If you want to secure a loan for any reason it is highly recommended to seek broker advice as the choices are vast and can be very confusing. A broker will listen to your needs and assess the best option to suit your circumstances now and in the future.

Assistance?

If you would like to speak to a qualified adviser, please do make contact and they will be happy to help.

Second charge loans have risen in popularity over the last few years. Before the credit crunch second charge lending had a rather different image to the one portrayed today.

This outlook has changed significantly over the last few years with banks and payday lenders charging very high interest rates. The second charge sector has innovated and now is seen as a perfectly acceptable form of funding for the borrower in the short and longer term.

Whilst the industry has never been shy in blowing its own trumpet the latest figures from the trade body demonstrate that there is a great deal of substance behind the PR machine.

Brokers up and down the UK reported large increases in business in 2017 with loans being written well in excess of 2016.

This rapid growth has seen an injection of new lenders enter the market, together with a wider range of new specialized products to basically fit the majority of needs.

The clear majority of second charge loans are now used by homeowner families but now landlords are seeing this as a flexible option to main stream lending. This type of funding can be put in place without fuss and very quickly to meet the client’s needs. For the borrower second charges offer flexibility and used correctly can assist in generating the funds needed rapidly.

The future for second charge lending seems to be very bright for all those involved. There was always a gap in the market for loans that could be completed quickly and efficiently.

Find out more

As second charge lending has progressed more and more flexible products have been launched, if you would like to know more about this type of loan please call one of our fully qualified advisers.