The rapid rise continues

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.

Why is secured lending better?

One reason you may wish to choose a second charge loan is that it’s likely to offer far better rates of interest as the loan is secured. Unsecured loans from high street banks and other sources can be notoriously expensive. Just check out the rates charged by the “pay day” lenders.

Secured loan – means the amount borrower is secured against a property giving the lender far less risk.

Unsecured loan – means the loan is free of any securities and therefore higher risk to the lender.

Secured lending is particularly useful for those who might find it difficult to obtain the loan required without security. Such groups of people may include the self-employed or those who have had past credit problems.

For many people wishing to raise funds the choice is between a second charge loan and re-mortgaging. There are several reasons a second charge loan may be preferable over a re-mortgage but there are two key very common factors.

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

-You currently have a mortgage with penalties to change.

These two factors alone make a second charge deal an attractive way forward to securing the funds required.

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 contact one of our advisers who will be happy to help you achieve the correct loan for you.

Expensive debt you want to clear?

2017 saw a sharp rise in the number of homeowners looking to utilise a second charge loan to consolidate their expensive long-term unsecure debt.

This notable growth in the level of household debt, alongside record low rates on second charge products, are combining to boost demand for second charge loans.

2018 has seen the trend for second charge demand increase again as borrowers are shifting away from expensive shorter term unsecured loans. It would seem the so called “pay day” lenders are far less attractive to the homeowner due to the extremely high interest rates being charged.

A second charge loan will not suit all needs, debt consolidation is a very complex issue and needs to be researched to ensure the best deal is found. As an example, borrowers who are paying a low interest rate on their main mortgage, or they are within an early repayment charge period, a second charge mortgage can be the most sensible way to consolidate that expensive debt.

There are now more lower rate second charge products on the market than ever before due to lenders recognising the growth in this form of lending.

Lending these days is a very confusing area for most consumers with so many alternatives available. It is highly recommended that anyone considering taking out a new loan should seek professional advice as a mistake could prove very costly in the long run.

Can we help?

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

Second charge loans, a new era of lending

The second charge loan market has recently been hitting the headlines revealing large increases in application and completion levels.

In years gone by the process of a second charge mortgage had been very different and proved very confusing to most homeowners. Borrowers clearly did not fully understand how a second charge loan worked or how to go about getting the correct information.

One of the factors behind the escalating growth of this sector is driven by the sky-high interest rates charged by the unsecured lending market. In light of the recent lending figures it is clear regulation of the seconds market has resulted in intermediaries considering second charge mortgages more closely as a practical solution to client’s needs.

MCD regulation has helped align second charges to the mainstream mortgage market and opened up more choices for the borrower. As a result, the division between first and second charge lending has become far narrower.

Resurgence of secured lending

Although regulation has been a contributing factor, it is felt within the industry that the commitment from the lenders to engage with the intermediaries will be instrumental in the long-term success. Because of this new found understanding more and more intermediaries/brokers have a deeper understanding of second charge lending and the potential benefits it offers clients. It is therefore little surprise that second charge lending has begun to see record levels of completed business.

The way forward

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

Value of professional broker advice

Almost nine out of 10 Second charge loan applications through an intermediary (broker) resulted in an offer in 2017 – up from seven in 10 in 2016. What is more four in five of those offers went to completion, up from seven in 10 the year before.

In particular second charge borrowers have benefited from widely available and competitively priced deals. This is a tribute to the lenders who have expanded their portfolios of loans available to the majority of homeowners.

With the Bank of England base rate on a slow upward trajectory, lenders remain firmly focused on rigorous affordability tests so that borrowers do not overstretch themselves to achieve their ambitions. Brokers are very positive about future prospects, as two thirds said they were very confident in their own business’ activity for 2018.

The rise of lenders willing to help second charge borrowers and greater innovation in the market means more and more borrowers are securing cost effective loans to meet their needs. There are still several obstacles to overcome and it is vital for lenders to continue to innovate and adapt criteria to meet the changing needs of the second charge borrower.

If you are looking to take out a loan in the near future, you should keep in mind that interest rates are likely to increase sooner rather than later. Careful consideration should be given to fixing your rate and a broker will explain all the pro’s and cons helping you make the correct choice.

Help required?

If you would like to discuss your lending requirements, please do make contact and one of our advisers will be happy to assist.

Second charge loans gaining momentum

Brokers and lenders alike have welcomed the Bank of England’s latest figures clearly showing second charge lending hitting an all-time high.

The figures highlight new and existing buy-to-let investors have raised the required deposit levels by taking out second charges on existing property holdings. Landlords have been hit from all angles of late, but this doesn’t seem to of dampened their enthusiasm.

2018 has started well with brokers reporting a steady rise in both applications and completions compared to the same period last year. A broker in Sussex commented “second charge lending has in our view taken off in a big way”. “Seconds offer speed, flexibility and decent interest rates for all homeowners wanting to raise funds”. “Since regulation lenders have reduced set up costs and interest rates”.

Second charge lending is increasing its popularity month on month. When you compare the interest rates on offer to unsecured lending it is very evident why this form of fund raising is growing in stature. Lenders have been quick to recognise the increase in popularity and have responded in a very positive manner with a wealth of new and innovative products.

There are many advantages that a second charge loan offers, not least the quick turnaround time which can be as little as 15 working days. This of course is a great deal faster than a standard re-mortgage which can drag on for months and months.

Lenders are reporting the largest growth area of this type of funding is via the self-employed workforce which includes landlords. Raising funds for the self-employed or contracted worker can be a challenge indeed but second charges do offer far more flexibility, so they are worth exploring.

Can we help?

If you are considering raising funds on your property, please do contact one of our fully qualified advisers who will guide you in the right direction.

Borrowing money can be so confusing.

Raising funds at any time in life especially nowadays can be very daunting and expensive if you get it wrong. There will be various reason you need to raise cash and many options open to the majority. First piece of advice to heed is to get professional advice as the wrong loan over a period of time could cost thousands more than you need to pay.

Generally, a second charge or secured loan will be cheaper than one unsecured but again please seek advice as this is not always the case.

Using a reputable broker will help eliminate a lot of the questions as they are experienced with all types of lending.

Some reasons why a second charge could be right for you:

  • When you want the money quickly! 

Secured loans can be quick to set up, and in some cases where the loan to value is low and a valuation isn’t necessarily required, money can be released very quickly. Usually however, this process can be longer and may take a week or so. Generally, the time from application to money in account is a great deal quicker than a re-mortgage.

  • When you’re struggling to prove your income 

For self-employed applicants looking for a first charge mortgage, it’s currently possible to get a mortgage with one or two years accounts as an absolute minimum. For secured second charge lending things can be more flexible and certain lenders will accept business turnover, and even 9 months bank statements as proof of income. This is helpful for those who have recently gone self-employed or changed trading style.

  • When you have more severe credit history that mortgage lenders won’t accept. 

At the moment, main mortgage lenders can be quite flexible with their criteria when it comes to poor credit mortgage lending, accepting bankrupt or customers with CCJs etc. so long as they have the right equity and income. With secured lending however, there are certain lenders who will consider a much wider and severe range of credit issues, often at higher loan to values.

Help required?

If you are looking to raise money from the equity within your property, please make contact and one of our advisers will be pleased to assist.

Second charge loans set to increase

The first reports on second charge financing of 2018 are suggesting that the rise in new business numbers recorded in 2017 will continue in 2018.

However, it is felt that the increasing popularity of secured loans did not happen without a lot of effort from brokers and lenders alike. What the new figures don’t reveal is just how much arduous work has gone into building business volumes by awareness. The second charge industry should be particularly proud of how it has succeeded in promoting secured loans to brokers and the public.

It is believed that the sector is more likely to grow at a measured pace rather than a “boom & bust” situation, backed by the increasing numbers of advisers who are now aware of where secured loans can sit in their advice process.

If you look closely at the positives a secured loan can offer a borrower, then it is easy to see why this form of lending is being welcomed by all.

Lender choices

The last 12 months has seen a substantial increase in the number of loan types available to a property owner. Not only this but new lenders have entered the market which has to be good for the long-term growth and stability of the second charge industry.

The broker

These days due to the vast choices open to the prospective borrower it is vital they get a professional adviser to point them in the right direction. With so many loans and re-mortgages available anybody contemplating taking out loan would be very well advised to seek broker advice.

Can we assist?

If you would like to discuss your future and present borrowing needs, please do make contact and one of our qualified advisers will be pleased to help.

Why a second charge loan?

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.

For example, it could be used to fund home improvements, for loan consolidation and paying for a deposit and removal costs for a son or daughter moving into their first home.

Helping the kids

Parents are increasingly helping their children onto the property ladder by lending them money for their first home. Young people find themselves stuck in a cycle of renting and being unable to build up enough cash for a deposit on their first home.

According to recent research, parents or the Bank of Mum and Dad, will be involved in nearly 30% of property transactions taking place in the UK market this year.

The findings show parents will lend more than £6bn in 2018, providing deposits for over 250,000 mortgages, and helping family members to purchase homes worth £70bn.

If you wanted to use a second charge loan the list below are typical reasons why.

  • Locked into a fixed rate mortgage
  • Have an interest only mortgage – and want to keep it.
  • Have a lifetime tracker mortgage at an advantageous rate.
  • Need the money quickly and a re-mortgage will take too long.
  • Withdrawals from the ‘Bank of Mum and Dad’, to help children through university or onto the property ladder.
  • Need to release equity from a buy-to-let and don’t satisfy high street rental calculations.

Can we help?

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

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.