Second charge rates are still low

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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.

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.

 

Continued growth second charge mortgage market

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June saw the second charge mortgage market have its fourth consecutive month of growth, with new business up 33% by value and 22% by volume.

The number of new second charge mortgages in the first half of 2017 was 10,401, 11% higher than in the same period in 2016.

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. They are regularly used to fund home improvements.

The second charge market is performing very strongly, with four consecutive months of growth highlighting the sectors robustness. Consumers and investors have been hit by rising inflation, and this hasn’t been helped with the ongoing political and economic uncertainty following the General Election and current Brexit negotiations. However, this doesn’t seem to have deterred borrowers looking for alternative routes of financing.

The second charge market offers speed and flexibility coupled with very competitive interest rates, its little wonder consumers are taking to this route of financing.

With the market continuing to accelerate, it’s very important that awareness and availability of second charge loans improves among brokers and consumers alike to help them secure the most suitable financing.

Help?

If you would like to know more about the second charge market and how it could potentially help you please do make contact.

Why choose secured lending?

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The main reason why people choose secured lending is to save money which we all want to do!

A second charge loan is likely to offer better rates of interest as the loan is secured on your property. Unsecured loans from high street banks and other sources can be notoriously expensive, we have all seen the rates charged by the so called “pay day” lenders.

The reason for a secured loan being more cost effective is due to the lender having to assess the risk. If you are a high-risk borrower they will need to offset the risk with higher interest rates. So, if you offer security, then the risk involved is much lower and the lender will offer far better rates.

This is indeed particularly useful for those special groups such as the self-employed, retired or those who have had past credit problems.

There are many reasons a second charge loan may be preferable over a re-mortgage but there are three key very common factors.

1} Your credit history has deteriorated since you took out your mortgage.

2} You currently have a mortgage with penalties to change.

3} Speed of completion.

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 you. There are many different lenders offering numerous second charge loans so please do call one of our advisers.

 

Second charge loans & consolidating debt

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One of the many advantages of consolidating debt is that when done properly it lowers the total amount of interest you are paying. The idea is to consolidate higher interest debts into a single loan with a lower rate. So, the first question to ask is what makes up the bulk of your debt?

If most of what you owe is on high-interest credit cards, you may be a suitable candidate for consolidating debt. Credit card interest rates can run anywhere from 9% to 35% or more. Debt consolidation loans structured as secured loans against property almost always offer significantly lower rates.

Sometimes interest rates and terms are not the two most key factors for debt consolidation. Sometimes the simple matter of needing more money to pay your monthly bills is the priority. So, your next question is whether you absolutely need a lower monthly payment.

Take a look at your budget. If your finances are taken to the brink of disaster every month, you have no room for emergencies or unforeseen expenses. In your case, debt consolidation would also be a good idea if it could substantially lower your monthly outlay. It is better to pay more interest over the long term than face continued problems because you cannot pay monthly bills.

Second charge loans nowadays come in “all shapes and sizes” and there is likely to be one to fit your needs. The crucial thing is to get professional advice as there are so many options open to homeowners.

Can we help?

If you are looking to raise funds on the equity within your property please do contact us and one of our advisers will be happy to assist.

 

 

 

 

Why are second charges growing so quickly?

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In these very active times of financing it has become more important to be able to complete a deal on time. Second charge finance is growing in status year on year and is going from strength to strength, delivering funding quickly and efficiently. This is something high street banks and mortgage companies just cannot do on a regular basis.

A recent survey of borrowers clearly shows the most important ingredient in funding a deal is speed of completion and efficiency. The survey showed that traditional lenders are just taking far too long to get funds released and deals falter due to this reason. A new second charge loan can be completed within 25 working days which as we all know is far quicker than any re-mortgage.

One client interviewed said “I have just recently completed on a second charge loan and from start to finish it only took 17 days”. “I would have no hesitation to recommend this type of funding, just make sure you explore all options open to you before committing”.

Second charges offer

  • Fast completion.
  • Flexible repayment options.
  • No exit penalties for early re-payment.
  • Very competitive rates of interest.

Need help?

If you wish to raise funds and need clarity of what can be done call us now and we will be very happy to talk things over.

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Second charges moving forward month on month…

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The second charge mortgage market saw a rise in volume and value in May – making it the third consecutive month of growth, according to the Finance and Leasing Association. The value of the second charge market was £88 million in May, up 27% on the previous year.

There were over 1800 new second charge mortgages taken out in the month of May, a rise of 30% on the previous year. Second charge mortgages allow you to borrow a lump sum 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.

Second charge mortgage new business has ebbed and flowed over the past year, which was to be expected following the significant changes brought about by the market’s transfer into MCOB in March 2016 plus the Brexit vote. Customers are borrowing for a wide range of reasons, including renovating or extending their current property.

The value of second charge business was over £900 million in the year to May.

Despite the ongoing political and economic uncertainty – a result of the snap general election and Brexit vote – it’s encouraging to see the market continue to grow.

The second charge market has come a long way over the last 5 years and now is seen as a very serious alternative to a standard re-mortgage. The product range has increased significantly and now caters for the majority of needs.

Help needed?

If you are looking to raise a secured loan please do get in contact and one of our advisers will be happy to guide you.

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Rise in business continues to be consistent

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The Finance & Leasing Association (FLA) has revealed its members new business figures for the second charge mortgage market in May 2017.

During the month, £87m of second charge new business was completed, up 26% year-on-year. For the year to the end of May, £259m has been transacted, at 25% rise on the same period last year.

Second charge new business has ebbed and flowed over the past year, which was to be expected following the significant changes brought about by the market’s transfer into MCOB in March 2016. While the market is still in the bedding-in process, in the first five months of 2017 new business was up 12% by value and 9% by volume.

These figures go to prove the benefits and changes are filtering through to the homeowner, and they are borrowing for a wide range of reasons, including renovating or extending existing properties.

Consumer confidence remained robust in May, and another consecutive month of increased lending is a positive indication that the second charge market is in good shape. Despite the ongoing political and economic uncertainty – a result of the snap General Election and Brexit vote – it’s encouraging to see the market return to the levels seen before the Mortgage Credit Directive implementation.

Can we help?

If you are looking to raise capital from the equity within your property please do get in contact and one of our qualified advisers will be happy to help.

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Second charge mortgage, what is it?

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Second charge mortgages are becoming increasingly popular with the number of people opting for one at its highest level since 2009. They are also referred to as secured loans. This is because the loan is secured on the property thus making the interest rate cheaper than an un-secured loan.

Second charge loans allow you to borrow a lump sum 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.

First charge mortgages are also secured loans for exactly the same reason – it’s just that they are traditionally referred to as a mortgage.

What can I use a second charge mortgage for?

You can use them for a number of purposes without affecting your normal mortgage. A second charge mortgage is extremely helpful if you are struggling to get a personal loan, maybe because you are self-employed.

If you are looking to re-mortgage a second charge mortgage might be cheaper if your mortgage has a high early repayment charge, or you have a particular product you don’t want to lose i.e. fixed rate, discounted rate etc.

Lots of people also use them to fund home improvements and add value to their property.

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.

Need to know more?

If you require more information about raising a secured loan please make contact and one of our advisers will be happy to help.

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Is it now time to act?

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Second charge loans are growing in stature time on time as more homeowners become aware of their vast array of uses.

Recent house price figures are showing a continued increase in property values which is great news for homeowners indeed. With property values increasing this in turn means more free equity within the property to raise capital.

There is a lot of talk within the industry that mortgage interest rates are about to increase and experts are showing concerns homeowners are not ready for this jump. If a rate rise is coming then this will also filter through to the second charge market in due course.

So, if you are looking to raise capital on your properties equity now would be a very good time to start so as to avoid any nasty surprises. A second charge loan has very few restrictions and will complete much quicker than any re-mortgage.

The good news is there are still plenty of advantageous fixed rate second charge loans available but this could change very quickly in these uncertain times.

It is not always best advice to use a second charge loan to raise funds and you should always discuss your needs with a qualified adviser. A wrong move when raising capital can be costly in the long term so please do seek advice.

Like too know more?

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

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Second charges forging ahead

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We are seeing more and more second charge loans forging ahead. Encouragingly, completions for April alone were £79m – 53% higher than in April 2016.

The sector is pushing to break annual lending of £1bn for the first time since the recession.

Pricing is easiest to change and it has fallen at all LTVs, with starting rates now at a little over 4%. Product diversification is at its highest ever level offering a product to suit the majority of client needs.

Since the MCD, affordability checks have standardised with those of first charges. Prior to this, a major advantage of second charge over further advance or re-mortgage was increased loan-to-income ratios. In retrospect, it seems crazy for a second charge loan, normally with a higher interest rate, to be permitted at higher LTI ratios. But this was a result of softer regulation outside the FCA and the need to offer an advantage over the other options.

Further benefits remain, such as higher loan to value interest-only, lending with adverse credit, unusual property type and no or low early repayment charges, but these are relatively specialist in comparison.

In today’s market, second charges are chiefly preferred for their economic advantage over the short to medium term.

Borrowers who would trigger an early repayment charge (ERC) or lose low interest rates in order to raise capital are better off taking a second charge, then refinancing either once the ERC ends, the current product expires or the Bank rate is expected to increase.

Virtually all second charge lenders have embraced automation now. Calculation of affordability has been hugely simplified and made more accurate, which can be tailored to region, family size and a host of other factors.

Need to know more?

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