There are several reasons why a second charge mortgage might be worth considering:

• If you’re struggling to get some form of unsecured borrowing, such as a personal loan, perhaps because you’re self-employed.
• If your credit rating has gone down since taking out your first mortgage, re-mortgaging could mean you end up paying more interest on your entire mortgage, rather than just on the extra amount you want to borrow.
• If your mortgage has a high early repayment charge, it might be cheaper for you to take out a second charge mortgage rather than to re-mortgage.

Points to consider

Before you decide on a second charge mortgage, it’s a good idea to get advice from a suitably qualified mortgage adviser. They will be able to help you find the loan that best meets your needs and financial situation both now and in the longer term. They will have to follow the rules as set out by the FCA when dealing with you. These rules are designed to protect you.

If you choose not to get professional advice, you run the risk of taking a loan that isn’t suitable and this could cost you thousands extra in interest payments.

When you’re looking into a second charge mortgage, make sure you:

• Approach your existing lender and ask them what they would charge for an additional loan.
• Find out the exact mortgage terms, fees, early repayment charges and rates of interest.

Help required?

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

Years gone by second charge mortgages may have been overlooked or consciously excluded from the options considered by mortgage intermediaries for clients looking to capital raise. The alignment of regulation has led an increasing number of mortgage advisers to explore more deeply the options available to their clients, and with good reason.

In a sustained low-interest-rate environment, there has never been wider availability of low-cost borrowing options for those seeking to re-mortgage.

However, there are groups of borrowers who may need to raise finance but would be financially disadvantaged from the prospect of re-mortgaging away from their current deal.

Interest-only existing mortgage focus

Interest-only mortgage borrowers often find themselves between a rock and a hard place when it comes to further borrowing especially if they want to retain their existing terms. If they re-mortgage, there is a strong possibility they will have to sacrifice their interest-only mortgage. Many borrowers these days can get a nasty shock when they attempt to apply for a further advance from many mainstream mortgage lenders. A practice widely applied by mortgage lenders either requires the borrower to provide proof of their exit strategy for repaying the interest-only loan, or a conversion of their existing mortgage borrowing as well as the new loan amount onto a capital and interest basis. This situation in many cases makes raising capital a non-starter, leaving the client frustrated. This is where a second charge can be a vital alternative.

Second charge to the rescue

A second charge loan would enable them to retain the bulk of their borrowing on an interest-only basis and on their existing terms, whilst taking out the additional mortgage on a repayment basis. With over 3.3 million interest-only mortgages in the UK, a second charge could potentially be of enormous benefit to this group of borrowers.

Can we help?

If you are looking to raise capital against the value of your property please do contact us and one of our advisers will be happy to assist.

In these challenging times of financing, it has become more important to be able to complete a deal within a set timescale. Second charge finance has grown in status year on year and is going from strength to strength since regulation.

A second charge delivers funding quickly and efficiently which is something high street and private banks just cannot do at a competitive rate. A recent survey of home owner’s clearly shows the most important ingredient in funding a deal is speed and ease of completion. The survey also showed that traditional lenders are taking too long to get funds released and deals falter due to this reason.

A second charge can be secured on a property and “sits” behind any first charge mortgage both on private and buy-to-lets. A loan without complications can be completed within 14 working days which is considerably less than a re-mortgage.

This time of year always puts pressure on the family budget, so if you are thinking of reviewing your finances do consider a second charge if a loan is required. Interest rates and conditions are very competitive when compared to a traditional mortgage.

There is little doubt second charge lending has had its most successful year. The good thing about this is the lenders have taken this on board by expanding products to meet the challenges.

These are indeed very progressive times for the second charge finance market as the industry looks forward to 2018.

Need help?

If you wish to raise a loan secured on a property you own please do make contact and one of our advisers will be happy to assist.

The second charge loan industry has seen progressive growth over the past few years, given it used to be a much less visible sector of the lending market.

The facts are the seconds market grew by 31% in 2016, with the total size of the sector reaching record levels. What is even more astonishing when you realise that the industry has nearly tripled in size over the past three years.

2017 is following the same trend with loan applications and completions up 21%. 

The rate of growth is now slowing down somewhat, which is understandable as greater awareness of the industry and the options it provides is now clearer to homeowners than ever before. This is in large down to brokers and alike taking on board the value a second charge loan can offer clients as opposed to a re-mortgage.

The industry’s huge growth shows property owners have become aware of the ways a second charge loan can help their family or business grow. This type of funding is so quick and easy to complete compared to the long drawn out re-mortgage process.

As the second’s sector continues to build on its successes, we are seeing lenders producing more new products to assist borrowers. These are indeed very good times for the second charge industry and all looks well for 2018.

Can we help?

If you require more information how a second charge loan can help you please call us and we will be happy to assist.

Much has been said about the expanding trend of the second charge sector over the past year. Brokers and clients alike continue to be surprised at how competitive rates are and how, in certain circumstances, it can make much better financial sense to arrange a second charge mortgage than to re-mortgage a property.

Since the implementation of the Mortgage Credit Directive, there has been a significant increase in lenders entering the sector. These fresh players not only serve to reduce annual interest rates through the increased competition they bring but also add value to the second charge proposition through innovation in their products.

The attempt to align first and second charge mortgages continue and will always be aided by similarity on fees and rates.

For lenders, a second charge, of course, poses a greater risk than a first charge, so there will always be differences between the rates on offer. That said, with the cheapest published rate starting at just a little over 4% and 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

The Brexit referendum result, coupled with the more potential rises to the Bank of England base rate, means more clients are looking for the security of a fixed rate over a longer term but with the added flexibility to overpay without penalty.

Not so long ago 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 a 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.