Borrower’s turning to second charges

Borrower’s turning to second charges

With tougher lending rules now in force, more homeowners are turning to a “second charge” loan to fund home improvements, such as extensions, or consolidate debt. Industry figures show a 27.5% rise in the sums borrowed this way in the six months to the end of December 2017.

The rise in second charge borrowing (secured loan) – so called because the lender is second in line for repayment behind the main mortgage provider if a borrower’s home is repossessed – has been fuelled by rising house prices and the squeeze on household budgets. As homeowners become more aware of this form of lending and its flexibility so the figures have increased.

Homeowners should be aware this type of loan will NOT suit everybody, and it is highly recommended to seek professional advice. 

What’s the attraction of a second charge?

Mortgage rules have become stricter in the past couple of years, with lenders applying tougher “stress tests” to make sure borrowers can meet repayments if interest rates rise. So you may not be able to secure extra funds from your original lender. Some lenders consider certain borrowers too old or too risky to increase their lending.

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, the first mortgage is unaffected, but you need to tell the original lender. You must have enough equity in your home to cover it.

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 second charge lender may take a different view.

Also, importantly 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.

Like to know more

A second charge loan will not suit everybody so it’s very important to get professional advice. We have qualified advisers waiting to help so please do make contact.

Flexible secured lending

Second charge lending has many uses and one of the advantages of this type of loan lies in its flexibility.

It may be the case that those who need to raise funds are not aware they can do so through a second charge which is, of course, where advisers and brokers come in. This type of lending can be suitable for a far wider range of situations than many realise.

A second charge mortgage provides an extremely useful alternative where consumers want to raise additional funds but do not want to change their existing first charge mortgage – especially if there would be additional costs in doing so.

There are some very clear benefits a secured loan can offer when used correctly, which could well improve borrowers long-term financial prospects. Although consolidating debt is not always the right answer, a secured loan is often a suitable option given the lower interest rate charged when compared to an unsecured loan.

Suitable for you?

  • Fast completion
  • Low-interest rates
  • No need to change original mortgage
  • Vast amount of uses
  • Total flexibility
  • Loan terms to suit majority of needs

Second charge lending has so many benefits it is worth checking out whether this may suit your needs. Do ensure you seek professional advice as there are so many options.

Need some help?

Please don’t hesitate to contact if you require any assistance raising funds, one of our advisers will be happy to assist.

Loan choices increase

It is, without doubt, secured lending popularity is increasing daily. Second charge mortgage completions have increased at a rapid rate over the last 2 years since regulation.

This type of lending is quick and easy if you own a property, lenders are increasing their product portfolios at a rapid rate. An average case presented will complete in approximately 17 working days and sometimes even less. As you can see this is so much quicker than the standard re-mortgage, please do bare in mind this type of loan is not always suitable for all situations.

We are seeing different lending plans emerge on a monthly basis 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.

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.


Could a second charge loan help you?

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.

Sound solid increase in business for second charges

The value of new business for second charge mortgage lending was £242m in the three months leading up to November last year, 11% more than the year before.

There were well over 5,000 new agreements in the three months to November, an increase of 7.2% on the previous year. The market saw £80m of second charge business in November alone, an increase of 3.7% year-on-year.

The second charge mortgage market reported further sustained growth in December, and in the first 11 months of 2017, new business volumes increased by 13.8% compared with the same period in 2016.

Lenders remain focused on fully embedding the new regime, which sees first and second charge mortgages regulated on the same basis. This has helped highlight the benefits a second charge loan can have too many borrowers around the Country.

Broker benefits

Due to the second charge market growing so quickly lenders have produced many new and innovative products to suit most needs. With the loan choices available it is highly recommended for potential borrowers to seek broker advice, a wrong move without advice could cost thousands extra in interest payments. A professionally qualified broker will assess the client needs and recommend the appropriate products accordingly.

Can we help?

A second charge loan will not always be the best advice, please do make contact and one of our fully qualified advisers will be happy to explain the options open to you.

Second charge loans can be very helpful

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.

Time to clear that debt?

Second charge loans can be a very useful facility for managing overspending and could help resolve debt problems that may have built up over the years. Christmas time always brings extra stress on the family budget, a second charge low cost loan could help elevate some of these problems.

So, if you are thinking of reviewing your borrowing it would be a very good idea to consider a second charge. Please be aware this type of funding will not suit everybody and it is strongly advised to seek professional help before making a final choice.

For those borrowers on a favourable mortgage deal with the first charge lender, they can keep that deal and use a second charge loan to pay off or consolidate their other debts.

Second charge loans in the majority of cases will complete much quicker than a re-mortgage which can prove vital in certain circumstances.

There are some very clear benefits a secured loan can offer when used correctly which could well improve the customer’s long term financial prospects. Although consolidating debt is not always the right answer, a secured loan is often a suitable option given the lower interest rate charged when compared to an unsecured loan.

There is little doubt that this form of lending will continue to grow as it has done over the last few years. The majority of borrowers are waking up to the fact that unsecured lending is far too expensive both in the short and longer term.

Help required?

We have a team of fully experienced advisers waiting to assist you. Please do make contact and start to repair your finances for 2018.


Why are second charges growing so quickly?

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.


Homeowners choosing second charges

Homeowners are increasingly turning to second charge mortgages to raise additional funds without having to change their existing mortgage deal.

The second charge mortgage market saw 27.5% growth in lending and transactions in October compared to the same month last year.

It follows a slowdown in September where figures were largely unchanged from 2016 and continues the significant growth of the sector earlier in the year.

According to recent data, 1,880 second charge transactions were completed in October this year with a value of £85m – up 19% and 20% respectively compared to October 2016.

The figures were also notably up on September 2017 where just 1,580 transactions were completed totaling £72.8m.

Cautiously optimistic

Whether it is to fund renovations, help a family member with a deposit, or consolidate household debts, more borrowers taking out second charge mortgages – many at a higher value – and this has led to a strong year for the sector.

The market is cautiously optimistic that this increase will continue into next 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 on of our advisers will be happy to help.


Second charges continue to grow rapidly

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.