New era for second charge loans

Customers who have unconventional modes of income or employment, or those who are locked into fixed-rate mortgages with prohibitive Early-Repayment Charges who wish to borrow at a higher loan-to-value ratio or protect an existing mortgage rate. These are just a few of the scenarios in which re-mortgaging options can often be unsuitable.

Prior to the introduction of the Mortgage Credit Directive (MCD) in December 2016, low levels of product knowledge and concerns about fees were being cited as some of the primary reasons for the low volumes of business.

However, the introduction of the MCD brought the second charge mortgage sector further into line with its first charge cousin (Main Mortgage).

There have also been moves towards new and previously untapped areas of influence within the market, with growing numbers of buy-to-let landlords using second-charge loans to grow their portfolios or to fund improvements on existing properties, combined with a comparable rise in the number of customers using loans to consolidate debt.

Indeed, many people within the industry now believe that the uncertainties of a volatile Brexit and the rise in the number of adverse-credit lending scenarios are driving enquiries upwards.

There has also been a significant uptick in cases involving home improvements where customers have been referred for a second charge mortgage as a cheaper option than re-mortgaging.

As we venture ever further into 2019, we can see an industry that is characterised by greater revenue and business streams, wider opportunities, and regulatory safeguards and increased levels of acceptance among both consumers and advisers. In short, the future for second charge loans looks very bright.

Can we assist?

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

Second charge loan applications increasing monthly.

The number of loan applications increased by nearly 23% in the month ending April 2019 compared to the same period last year. There has also been a significant increase in the value of applications for second charges in 2019 compared to 2018.

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

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 independent professional advice, we have a team of experts waiting to take your inquiry so please do make contact.

Progressive lending figures

The number of new second charge agreements rose by 31% year-on-year to reach 2,392 in April, the Finance & Leasing Association (FLA) has found.

In April there was £108m worth of new second charge business, up 25% year-on-year.

In the four months to April, the value of new second charge business was £292m, an increase of 19% from the previous year.

In April, the second charge mortgage market reported its highest level of monthly new business volumes since October 2008. It is a competitive and innovative market for consumers and should be taken very seriously if you wish to raise funds using your property as collateral.

In the four months to April, there were 6,500 new second charge agreements, up 25% year-on-year.

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 independent 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.

Help required?

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

Secured lending and you

A second charge mortgage (secured loan) is a loan that allows you to use the equity (difference between what you owe and its value) within your property as security and it effectively sits on top of your existing mortgage. Usually this second loan would be arranged via a different lender to your existing mortgage, there are plenty of specialists in the market place offering various options. On completion of the second charge it then means you will have two mortgages on your home. The main mortgage will always take precedence over the second loan.

Second charge lending is very useful when the homeowner wishes to raise funds and the first mortgage secured on the property has charges to change. This is not always the case and it is highly recommended to seek independent professional advice before you decide the best route to follow.

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 your 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.

Choosing a loan

This is no easy task as there are so many different options open to the majority of applicants. Be sure you know how much you feel comfortable in repaying each month and seek independent professional advice as to the best loan to suit your needs.

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 independent advisers who will be happy to help.

Looking for an affordable loan?

 Second charge loans are widely available through specialist lenders, yet this latest research suggests it’s only the minority of people who explore them as an option when looking at ways to raise money.

Awareness has improved over the last 2 years, but borrowers still are unsure as to the benefits.

Of the minority who were aware what a second charge mortgage was, 30% didn’t understand what the difference between this and a re-mortgage was.

Second charge lending is now regulated by the Financial Conduct Authority, as part of its Mortgage Credit Directive. This means they are now more strictly governed with regards to affordable lending, giving consumers more peace of mind. Previously they fell under the FCA’s consumer credit agreement.

Anybody contemplating taking out a new loan would be well advised to seek independent professional advice as making an incorrect choice could be very costly.

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 example, you may not want to extend the term on your current mortgage, or lose a good rate, particularly if your circumstances have changed or you have an interest-only mortgage that might be difficult to replace.

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

For those thinking of raising money by releasing equity in their properties, it’s important to explore both second charge and re-mortgages.

Can we help?

If you would like to know more about raising funds from the equity within your property do make contact, one of our fully qualified independent advisers will be happy to assist.


Second charge lending completing faster than ever before

A recent survey taken from varying types of homeowners clearly shows speed of completion is a very 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 also.

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”.

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 15 working days, this does of course vary dependant on the complexity. 2019 has 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.

There is little doubt second charge lending has had its most successful year in 2018, the good thing is lenders have taken this on board and reacted positively to meet the challenges.

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 help.

Raising funds using a secured loan

Have you woken up with a bit of a financial hangover lately? Perhaps you’ve got big plans for the year ahead and want a cash injection to fund those plans, or maybe you need a new car or home appliance? Well, whatever your reasons for needing a loan, you can now snap one up for the cheapest ever rate.

There is a great choice of secured loans available these days but do be very careful as a lot of the unsecured deals carry heavy interest rates. Secured lending (second charge) can be very cost effective indeed with record low interest rates currently on offer. They are relatively easy to apply for and funds can be released much quicker than a traditional re-mortgage.

Lowest loan rate on record

This is the lowest that secured lending rates have fallen, which will delight borrowers looking to consolidate their debts. It has come at a particularly difficult time of year for those who may be stressed over their finances and spending too much over Christmas perhaps – paying off an expensive overdraft or credit card should become a priority, so these low rates are likely to attract many consumers.

It’s worth pointing out that these record-low rate second charge loans are unlikely to be around much longer as experts are predicting general rate rises all round due to Brexit. So if you are looking to raise funds it could be a good idea to act sooner rather than later.

Can we help?

If you are looking to raise funds and require help please do contact one of our independent advisers and they will be pleased to guide you.


Self-employment and borrowing money can be tough

The latest figures from the Office for National Statistics show self-employment is at its highest point since records began over 40 years ago, this means nearly 17% of UK workforce is now self-employed.

This ever-increasing sector of the UK workforce is probably the most in need of specialist lenders. A large number of high-street lenders appear not to be interested in them at all as they see them as high risk.

This also applies to not only the self-employed but pretty much any working person in non-standard employment. Regular lenders seem to class this category of the work force as “too difficult” thus the need for specialist lenders.

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.  As lending to the self-employed is a specialist market it is recommended to contact an independent broker to get advice as to which loan suits your needs. Independent brokers have access to various lenders who offer very competitive rates in all areas of lending.

One of the many advantages of a second charge loan is it does not affect the first charge mortgage sitting on the property. In this case it makes a second charge a very cost-effective option and can save thousands on exit fees on the first charge mortgage.

Need some help?

If you think this form of loan could assist you in your planning please do get in contact and one of our qualified advisers will be happy to guide you in the correct direction.



Forging ahead

The second charge mortgage market experienced a rise in new business volumes of 24% in February, according to the Finance & Leasing Association.

It recorded 2,163 new second charge mortgage agreements over the month worth £98m.

In February, the second charge mortgage market reported its strongest rate of new business volumes growth since May 2017.

The popularity of second charge mortgages continues to grow as people opt to improve, rather than move.

What is a second charge mortgage?

A second charge mortgage is a loan borrowed against your home, as well as your existing mortgage.

A mortgage is the ‘first charge’ against your home. As the loan is secured against your property, you need to have enough equity in your home to support the loan.

If you were ever to fall behind on your repayments and, ultimately, have your home repossessed and sold, the ‘first charge’ mortgage lender would get their money back first, and the ‘second charge’ lender would be paid back after the mortgage and potentially other secured loans have been repaid.

As the second lender is taking a higher risk, second charge loans are charged at higher interest rates than mortgages (first charge loans). But they are cheaper than unsecured personal loans.

They are useful for borrowers who want to make home improvements or consolidate debt for example, but who do not want to, or cannot, re-mortgage their first charge mortgage.

This might be because they have a highly competitive interest rate they do not want to lose, or perhaps because they would be subject to Early Repayment Charges if they re-mortgaged now. It could also be that they are not eligible to re-mortgage, due to their equity stake, credit status or affordability.

Like to know more?

If you would like to more about second charge lending please do make contact and one of our advisers will be happy to help.


Tax bills and the second charge market

Second charge lenders have seen a 12% rise in mortgage activity during Q4 2018, compared to the same period in 2017, due partly to a surge in seconds being used for tax bills.

Of particular note was the fact that roughly 25% of the total loans arranged were partly or fully being used to cover self-assessment tax bills, payable before the January 31st, 2019 deadline. It’s common knowledge that the seconds market is thriving and the fact that people don’t want to jeopardise extremely low mortgage rates is certainly a key driver in this. What stood out in the fourth quarter, however, is how a far larger number of people than usual were using second charges to pay off their tax bills.

Speculating as to why it could be that a protracted period of high inflation has had an impact or Brexit uncertainty has reduced income or work flow.

The secured loan surge mirrors data from the Finance and Leasing Association (FLA), which showed the second charge market grew in December 2018 for the sixth month in a row.

The number of new agreements grew by 13% to 1,792 compared to 1,584 in December 2017, with a value of £80m — 6% higher than the £76m recorded in 2017.

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 qualified advisers who will be happy to help.