Homeowners should look at second charge lending

The latest data released has revealed that the average value of a residential property across the UK is still at a very positive level. This information puts the homeowner in a very strong position if they are contemplating raising finance and using the home as security.

Homeowners have choices if they wish to raise capital, they could re-mortgage or take out a second charge loan secured on the equity within the property.

What is equity?

This is very simple to work out, just take the current value of your home and deduct the outstanding mortgage you may have and what is left is known as equity.

Example:

Property Value £250,000 Outstanding mortgage £150,000 Equity = £100,000

Second charge lending has made huge strides in the last 5 years and now should be considered before any decision is made about re-financing your property. Second charge lending offers a fast and effective way to raise capital at a very affordable cost. Interest rates and set up costs offered by lenders have reduced significantly over the last couple of years and now are in line with the mortgage market.

The range of second charge loans are increasing every day with more flexible repayment methods being offered which has found favour with the borrower. Repayment periods are flexible and are generally set to suit the client’s wishes.

Like to know more?

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

Second charge interest rates are still very favourable

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, there is a feeling amongst the experts this trend could soon be reversed.

Second charge loan interest rates have been tumbling for months now. A second charge 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.

One thing you should do if you are contemplating taking out a new loan is to consult an experienced professional adviser as this form on loan will not suit everybody.

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. More and more innovative products are coming onto the market all the time which has to be good news for the consumer.

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, please call one of our advisers who will be able to guide you in the correct direction.

Second charge lending is far quicker

Second charge lending continues to grow in stature month on month as homeowners look for loans at affordable rates. Homeowners are becoming very aware of the costs associated with unsecured lending and the so called “pay day lenders”.

A recent survey taken from over 1000 borrowers clearly shows speed of completion is a key factor when taking out a new loan. Obviously, the costs and interest rates were very high on the list of wants but speed was very important.

One of the big appeals of a second charge loan is it meets all the surveys key facts such as costs and speed. On average a second charge loan is completed within 16 working days, this does of course vary dependant on the complexity. This fiscal year has also seen a significant reduction in set up costs plus interest rates are at the lowest ever recorded.

Lenders have seen their market share grow at a rapid rate. They have been quick to recognise the importance of speed in completing a deal as competition increases.

As second charge lending increases in popularity so does the product range, lenders have widened their range of loans and it’s likely there will be one to suit your needs.

There is no doubt second charge lending has had its most successful year in 2017, the good thing is lenders have taken this on board and reacted positively to meet the challenges.

If you are looking to refinance or raise capital for a new venture due consideration should be give to a second charge loan. Please do be aware this type of funding will not suit everybody and it’s recommended to seek professional advice.

Need some assistance

If you think this type of loan could assist you with your future planning, make sure you get the right one 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 guide you.

A better choice of lending?

More people than ever before are turning to a second charge mortgage to raise funds rather than taking out a personal loan or re-mortgaging.

 What is a second charge mortgage?

Second charge mortgages are becoming increasingly popular, with the number of people opting for one at its highest level since 2008. They allow you to borrow a lump sum secured against your property 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.

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.

Equity?

This is the percentage of your home owned outright by you. You can work this out by calculating the amount you owe on your property against the value of it. So, if your property is worth £300,000 and you still have to pay off £200,000 on your mortgage, you have £100,000 in equity.

You don’t need to have a high credit rating, in fact you might even be able to get one with a low score. This is because lenders look more favourably on borrowers with a poor credit rating if they are prepared to borrow against their home. The typical minimum term is three years and the maximum is 30 years and they can be paid off alongside your existing mortgage. You can borrow from £1,000 (varies from lender to lender) upwards and the greater the equity in your property, the more you will be able to secure.

Like to know more?

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

Boom start to the year!

Second charge mortgage business volumes grew in the first three months of the year, according to figures published by the Finance & Leasing Association.

It said that £195m was lent in second charge mortgages in the first three months of this year, which was10% more than the same period last year.

In terms of sales volumes, there were 4,522 second charge loans lent to borrowers, 14.6% up on a year earlier.

What are second charge mortgages?

The mortgages are taken out by borrowers to run in addition to their existing mortgage and can be a useful way to raise funds without disturbing your current deal, or to consolidate debt.

They usually have a shorter term than a mortgage and are similar to personal loans. However, unlike high street or unsecured loans, second charge mortgages are secured against your property. As the loan is secured against a property it is likely interest charged will be less than an unsecured loan.

Helpful for the self employed

If you are self-employed and have a current mortgage a second charge loan could be just the help you are looking for. Second charge loans are fast to complete and far more flexible than any re-mortgage. A second charge loan offers a quick affordable solution to raising cash secured on your home.

Why choose a second charge loan?

  • Faster to complete than a traditional re-mortgage.
  • Normally less fees.
  • Very attractive interest rates.
  • Loans are very flexible.
  • Ability to retain current mortgage deal if on a low rate.
  • Helps the self-employed

 Like too know more?

Our advisers are fully trained and skilled in all areas of lending so please do contact us to discuss any requirements you may have.

Unsecured loan v’s secured (second charge)

An unsecured loan is not protected by any collateral or guarantee, so should you default on payments the lender can’t automatically take your property or assets. They can be offered to people who don’t own property and that makes them available to a much wider range of borrowers. They are flexible, and you can choose the amount and over what time period you repay your loan.

You can apply for an unsecured loan generally if you are aged over 18, irrespective of whether you are a homeowner, but you may be asked for a Guarantor who has a good credit history. The interest you pay back depends on the amount you borrow; the interest rates will normally be much higher than the secured loan option.

A secured loan generally can be advanced for car loans and mortgages, It’s often referred to as a homeowner loan or second charge because the debt is linked to the borrower’s property.

The amount you can borrow and repayment terms offered on a secured loan is linked to your personal circumstances and the amount of “free equity” you have in your property. Free equity is the difference between the amount you owe on your mortgage and the value of your property. As an example, if your property is valued at £200,000 and you have a mortgage of £100,000 your free equity is £100.000.

You can generally borrow more with a secured loan, it is likely to be at a lesser interest rate than an unsecured loan, but should you default on your payments you risk losing your property.

Important

If you want to secure a loan for any reason it is highly recommended to seek broker advice as the choices are vast and can be very confusing. A broker will listen to your needs and assess the best option to suit your circumstances now and in the future.

Assistance?

If you would like to speak to a qualified adviser, please do make contact and they will be happy to help.

Loan to help you?

For some borrowers, a second charge mortgage will be a better option than a re-mortgage, so it’s surprising that so many consumers are unaware of what they are and how they work.

There can be several reasons that a second charge might be the preferred option for your new loan. For example, you may not want to extend the term on your current mortgage or lose an excellent interest rate you currently have.

Demand for this kind of loan, particularly when it comes to funding home improvements or debt consolidation has increased substantially over the past 2 years. One thing which is very evident is that consumers have become very aware of just how much they are paying for any unsecured loans they may have.

The vast majority of high street banks and standard lenders still 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.

These days there are some many loan options available to homeowners it is very important to get the correct one for your needs. Always seek professional advice before taking out any loan secured on a property you own.

Why choose a second charge loan?

  • Faster to complete than a traditional re-mortgage.
  • Very attractive interest rates.
  • Loans are very flexible.
  • Ability to retain current mortgage deal if on a low rate.
  • Helps the self-employed

Like to know more?

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

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.