Second Charge Loan, the better alternative

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The second charge loan market has recently been hitting the headlines revealing 3-year high lending figures breaking all recent records.

In years gone by the processes for first and second charge mortgages had been very different, and this proved confusing to most people. Borrowers clearly did not fully understand how a second charge loan worked or how to go about finding out what it could do for them.

One of the factors behind the escalating growth of this sector is driven by the extortionate interest rates being charged by unsecured lenders, in particular, the “payday lenders”. In light of the recent lending figures, it is clear recent regulation of the market has resulted in intermediaries or brokers considering second charge mortgages more closely. Regulation has helped align second charges to the mainstream mortgage market and opens up more choices for the borrower. As a result, the division between first and second charge lending has begun to be almost non-existent and this can only benefit all involved.

Resurgence of second charges

It is believed within the industry that the commitment from the lenders to engage with the intermediaries will be instrumental in the long-term success. As a result of this new found understanding more and more intermediaries have a deeper understanding of second charge lending and the potential benefits it offers clients. It is therefore little surprise that second charge lending is beginning to break all records.

Way forward

Second charge loans do not suit everybody and it is vitally important any potential client seeks the correct advice from a professionally qualified adviser. If you wish to know more please do not hesitate to contact us.

Borrowers looking to second charges

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More and more borrowers are turning to second charge loans as mortgage companies tighten controls on borrowing. Figures just released for the last quarter show “seconds” increasing to homeowners by 19% on the previous quarter, these increases are likely to be down to tighter controls from high street banks and other traditional lenders.

Brokers up and down the country confirm they are using second charges to assist clients in achieving their targets as high street lending becomes more and more difficult. One broker in Sussex said, “secured finance is filling a funding gap which has appeared”. “Borrowers are finding it more difficult to obtain loans from mainstream lenders who are implementing tougher affordability restrictions”.

Some 70% of brokers reported a significant increase in secured loans in the last quarter and the trend seems to be continuing. Of the brokers survey 100% of them stated they found second charge finance very easy to use and quick to complete. The Sussex broker commented “We have used “seconds” in the past and now we are using them on a more regular basis”. “Clients in general are impressed with the efficiency and speed of completion a second charge loan offers”.

There is little doubt this form of loan should be taken seriously especially when you compare the interest rates being charged by unsecured lenders.

Like to know more?

If you would like to know more about second charge financing and how it could assist you please do get in contact and we will be happy to help.

Expanding options with Second charge loans

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New types of loans make second charge lending a very serious player in the lending market as client confidence grows. Over the last 24 months, interest rates have reduced considerably making this type of loan a very serious option to a re-mortgage.

New lenders entered the second charge market in 2016 and this pattern has continued into 2017. Existing lenders are not holding back either as a vast array of new loan choices hit the marketplace in this ever-growing area of flexible lending.

Adverse credit

In the past, many people who applied were declined due to adverse credit. New age lenders are now assessing clients based on their current situation and not what has happened in the past. This is certainly good news for the borrower as lenders wise up to the potential this type of lending has. No longer are clients punished for a poorer than normal credit rating as in the past.

What loan types?

New loan deals are coming onto the market rapidly and it is advisable to get professional help when selecting one for your needs.

  • Fixed rates for 2,3 and 5 years
  • Tracker rate
  • Standard variable deal
  • Other discounted

Loan type features

  • Residential and buy-to-let
  • Can be cheaper than a re-mortgage
  • First charge loan not affected
  • Low set up fees
  • Low interest rates
  • Speed of completion
  • No redemption fees (selected loans)

Help required?

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

Increase again and again and again

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Second charge mortgage business in August 2017 rose in value by 25% compared to the same month last year, according to the figures from the Finance & Leasing Association. There was £91m worth of business in August made up of 1,905 applications – an 11% increase from August last year. The second charge mortgage market reported another strong month in September, with new business continuing to grow from a low base.

A second charge mortgage provides a useful alternative where homeowners want to raise additional funds but do not want to change their existing first charge mortgage. They are also a great deal cheaper and more flexible than unsecured loans.

Over the past 3 years, second charge lending has moved forward at a great pace offering homeowners a real alternative to a standard re-mortgage. Interest rates and fees have reduced significantly and the completion time of a deal can be as little as 20 working days.

The industry’s huge increase goes to show more homeowners are becoming aware of this form of a loan and how it could assist them in their future planning.

Providers

Most high street banks and standard lenders continue to show a reluctance to lend on a second charge basis leaving the door open for the specialist lenders. Second charge finance has provided an invaluable resource to those looking to secure finance for their projects quickly and cost-effectively.

As the second charge sector continues to increase, lenders are producing more new products to assist the borrower.

Can we help?

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

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Second charge loans are surging ahead

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It’s no secret that second charge lending is surging ahead as more homeowners look to secure cost-effective loans. Figures clearly show second charge lending is becoming a “household favourite” as opposed to expensive unsecured loans. Homeowner awareness has increased substantially over the last 3 years thanks to brokers taking on board the positives this sort of lending offers.

Second charges are widely used if:

  •  Currently on an interest-only mortgage product
  • Have been declined on a re-mortgage
  • Wishing to capital raise for business purposes
  • Recently self-employed or contract workers
  • Recently retired

Second charges also offer criteria advantages, such as higher loan-to-value borrowing, ERC-free or low-ERC loans, and lending to borrowers with complex income or multiple sources of income, or those with adverse credit.

The length of time it typically takes to arrange a mainstream first charge mortgage, re-mortgage or further advance can prove frustrating for those looking to raise capital quickly.

Many second charge lenders can arrange the required loan within 21 working days if everything is straightforward which is a considerable time-saving.

Rates and fees are also hitting impressive lows. Lenders in the sector continue to reduce interest rates, which currently start a little over 4%.

There are also several attractive exclusive, semi-exclusive and restricted panel products available through specialist packagers.

Although these do not challenge mainstream first charge mortgage rates, when considering the overall client scenario and costs, second charges loan are surging ahead and can provide a viable alternative.

Like to know more?

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

https://www.second-charge-loans.co.uk/contact

Second Charge Mortgage coming into its own

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After years of being known as a first charge mortgages slightly less attractive cousin, second charge is starting to come into its own.

With many lenders offering lower rates and the majority of master 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 — arguably prompted in March 2016 when the European Mortgage Credit Directive came into force — can be demonstrated by significant growth in both second charge loan volume and value during the past quarter.

Figures recently released by the Finance & Leasing Association reveal that second charge mortgage business increased in August by 27.5% in value and 30% in volume, compared with the same month in 2016.

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

Who can benefit?

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

 

Would you like to know more?

 

If you are considering taking out a new secured loan please do make contact and one of our qualified advisers will be happy to help.

 

More choices in the second charge market

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It is without a doubt that secured lending popularity is increasing on an annual basis. Second charge mortgage market has increased this year month on month and continue to do so.

Unsecured lending (payday lenders) is so expensive when you analyse the annual interest rates on offer. Homeowners are waking up to this fact and switching to the cheaper and safer secured lending option.

The largest growth area of loans is to the self-employed and the good news is there are plenty of 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 discounted variable rate.

Second charge 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 20 working days, as you can see this is so much quicker than the standard re-mortgage.

We are seeing different lending plans emerge daily and this can only be good news for the borrower. Interest rates and fees are reducing as lenders see this market as a growth area in the longer term.

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 your needs.

 

 

 

 

 

Booming! Second charge business increase

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Second charge business has increased by around a quarter year-on-year a new report just released shows.

From May to July 2017 there were 2800 second charges written  worth £270m, an increase of 24% and 27% compared to the same three months last year. The latest figures show that more customers are taking out a second charge mortgage – for example to fund renovations or help family members with a deposit for their first home.

In July alone there were over 1900 deals worth £90m, a year-on-year increase of 24% and the upward trend is continuing. The £90m July total still represents a fall from £94m in June.

While the ongoing political and economic uncertainty may have had some effect, it’s important to remember the summer months are traditionally a quieter period for activity, so it will be interesting to see what happens in the winter.

The market is robust, demonstrated by four consecutive months of growth, so it looks like lending will continue upwards for the remainder of 2017.

In order for the sector to reach its true potential, it’s hugely important that awareness and availability of second charge loans improves among all concerned. This will help homeowners secure the most suitable financing for their needs in the longer term.

Interest rates remain low at present but its anybody’s guess how long this will be the case.

Can we assist?

If you are looking to raise funds from the equity within your property do make contact and one of our advisers will be happy to help.

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More looking to second charge lending.

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Tougher lending rules are forcing more homeowners to turn to second charge loans to fund home improvements, such as extensions, and to consolidate expensive debt.

Industry figures show a 28% rise in the sums borrowed this way in the three months to the end of July against the same period last year.

The rise in second charge borrowing – so called because the lender is second in line for repayment behind the mortgage provider if a borrower’s home is repossessed – has been fuelled by rising house prices and the squeeze on household budgets.

The attraction of a second charge lending.

Mortgage rules have become much stricter in the past couple of years, with lenders applying tougher “stress” tests to make sure borrowers can meet repayments if interest rates rise. The consequences of this action are that you may not be able to secure extra funds from your original lender.

Some lenders will consider certain borrowers too risky to increase their loans.

But some borrowers also prefer to leave an existing mortgage in place because they would lose an attractive interest rate if they re-mortgaged, or there might be a steep exit penalty for switching.

By taking out a second charge loan with a new provider, your first mortgage is unaffected, but you need to tell the original lender.

A second charge loan may suit borrowers who have had payment problems, for example due to job loss or illness. These homeowners are often refused an increase on their first mortgage, but a specialist lender will most likely take a different view. More can be borrowed with a loan secured on a home than with an unsecured loan. Personal loans from high street banks are usually limited to £25,000.

Help?

If you want to raise capital using your home please do make contact and one of our advisers will be happy to assist.

 

Second charge applications on the Increase.

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The number of loan applications increased by nearly 22% in the month ending July 2017 compared to the same period last year. There has also been a significant increase in the value of applications for second charges in 2017 compared to 2016.

Our finance director commented “I’m not surprised at these figures as second charge lending has a lot to offer the homeowner”. “If you compare a secured loan to an unsecured loan these figures are more than justified”. “Interest rates are at an all-time low and the diverse types of loans on offer will fit most needs

Increasingly borrowers are seeking alternative finance when a conventional re-mortgage is not suitable. This could be due to the current mortgage having early redemption penalties or the current loan being on an advantageous interest rate you don’t want to change.

When should you consider second charge lending?

Second charge loans can be used for many reasons, such as a deposit for a new property investment, buy-to-let and re-development of an existing property to name but a few.

Many borrowers now are also viewing second charge loans as a simple and a cost-effective alternative to mainstream lending.

Second charges are fast and can complete in a matter of days as opposed to months on a re-mortgage.

Can we assist?

When taking out a new loan you should seek professional advice, we have a team of experts waiting to take your enquiry so please do make contact.