Secured lending and the value of professional broker advice

Almost nine in 10 second charge loan applications through an intermediary (broker) resulted in an offer in 2018/19 – up from seven in 10 in 2017. 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.

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 2020 and beyond.

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.

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 at some stage, especially with the Brexit and current pandemic situation.

Careful consideration should be given to fixing your rate and an independent broker will explain all the pros 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 independent advisers will be happy to assist.

Second charge rates remain low and attractive

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.

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 worth exploring with the advice of a qualified independent 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 independent advice.

When should you consider second charge lending?

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

Seconds are so flexible and easy

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.

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 independent advisers and brokers come in. This type of lending can be suitable for a far wider range of situations than many realise.

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.

What’s in it for you?

Fast completion

Low interest rates

No need to change original mortgage

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 independent 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 independent advisers will be happy to assist.

Second charge lending – seek professional advice.

When borrowing money whatever the most suitable solution may be, the ability to source second charge products for comparison against first charges means you will get the best deal to suit your needs. The key being that all options have been explored, not ignored.

It pays to get professional advice when seeking a loan that will be secured on your property as a bad move now could cost you thousands in the future. 

It all comes back to the fact that, if you don’t ask, you don’t get. By not asking the question, you are left in a rather precarious position. An independent professional adviser will have all options open to you and can advise you as to the best solution for your requirements.

Second charge lenders are also indicating they are keen to innovate further and bring products even closer in line to those offered by first charge players. If you add to that a greater degree of flexibility on affordability, you suddenly open up options that previously did not exist via the conventional re-mortgage.

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 independent 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 independent qualified advisers will be pleased to help. 

Is a secured loan (second charge) right for you?

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.

A second charge mortgage explained

Second charge mortgages are becoming increasingly popular and are at their highest level since 2008.

A second charge will allow you to borrow a lump sum secured against your property. You repay this extra loan 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 homeowner, 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.

What is equity within a property?

This is the percentage of your home owned outright by you. You can easily work this out by calculating the amount you owe on your property against the value of it. So, if your property is worth £200,000 and you still have to pay off £100,000 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 5 years and the maximum is 30 years and they can be paid off alongside your existing mortgage.

You can normally 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 independent qualified advisers will be happy to help.

Second charge loan choices increase in 2020

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 form of loan is quick and easy if you own a property, lenders are increasing their product portfolios at a rapid rate. Simply the amount borrowed is secured against the equity within the property and this fact alone makes the interest rate very affordable. An average case presented will complete in approximately 16 working days and sometimes even less.

As you can see this is so much quicker than the standard re-mortgage, please do keep in mind this type of loan is not always suitable for all situations. 

Different and more flexible 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.

Self-employed?

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 independent advisers who will be happy to help you secure the correct loan for you.

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Self-employed – Raising capital

It has always been more difficult for self-employed people to get a mortgage compared to salaried employees. For that matter, second charge loans have historically been somewhat harder to obtain for the self-employed as well.

At the heart of the issue is a tendency among self-employed individuals to not be able to satisfy loan officers looking to placate their own fears that the borrower will not be able to make good on his or her loan. The good news is that things are changing – at least where second charge loans are concerned.

A recently conducted survey among self-employed borrowers to gauge their view on second charge lending shows the following. 80% of respondents confirmed that second charge loans are now competitive enough to make them worthwhile; 20% disagreed.

The survey tells us something important. It tells us that consumer perceptions of second charge loans are improving among self-employed people. That’s no accident. If perceptions are improving, it’s because people looking to borrow are getting better products, better rates, and better service. It is an indication that the second charge market is responding positively to the needs of the self-employed.

Changing the way business is conducted

Lenders are changing the way they do business in order to better serve self-employed applicants. For example, one specialist lender indicated that it had reduced its tax calculation requirements while others are changing their income criteria to make it easier for borrowers to document their income.

Second charge lenders can do a lot more to help the self-employed than primary mortgage lenders because they have more flexibility. They are finally taking advantage of that flexibility to find ways to better serve self-employed borrowers. Even more encouraging is the fact that lenders are coming up with specialised products to account for the wide variety of self-employed workers and their circumstances.

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 professional independent advice as to the best loan to suit your needs. We have fully qualified advisers waiting who can assist you so please do get in contact.

 

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Is expensive debt holding you back?

The early part of 2019 saw a sharp rise in the number of mortgage advisers utilising second charge loans for clients concerned about their expensive long-term debt.

According to figures from the Bank of England, personal debt in the UK grew 12.4% in the year to 30 November 2018 the highest level since December 2008.

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.

If borrowers 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 more low rate second charge products on the market than ever before, many at highly attractive rates, so there are real opportunities now for homeowners to consolidate any expensive debt.

Secured loans should be considered as a viable debt solution offering products that are affordable and sustainable.

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 independent professional advice as a mistake could prove very costly.

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 lending rates reducing

 Lenders have seen the potential growth in the second charge lending market and have responded well by offering very competitive short and long-term packages to suit the majority of needs.

Over the last 12 months second charge interest rates have tumbled and are now very much in-line with a standard mortgage. With the Bank of England holding interest rates again it is expected the already low rates for second charge lending will fall again.

Second charge lending is growing in stature all the time and is now a very serious alterative to the once traditional re-mortgage. In the past a second charge loan was seen as a very expensive alternative to more traditional methods of raising capital.

Another major advantage of second charge lending is the speed of completion. A standard re-mortgage can take months to complete were as a second charge loan can be completed in 15 working days. This of course does depend on the complexity of the case submitted.

This form of loan will not suit everybody but it is without doubt worth exploring with the help of a qualified independent adviser. These days the choices of loans open to the majority of homeowners are 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 the appropriate professional advice.

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 professional independent advice as to the best loan to suit your needs. We have fully qualified advisers waiting who can assist you so please do get in contact.

 

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Average loan size increases

According to figures from the Finance and Leasing Association (FLA), the average second charge loan size has increased from around £25k ten years ago to around £45k now.

The loan-to-value of around 60-65% on a second charge loan hasn’t changed much over the last ten years though, so it is higher property values which have enabled the loan size increase.

Average repayment terms requested at the outset are around 15 years, although the majority redeem within about four to five; and two thirds request a fixed rate product giving them surety of their repayments for the fixed period – important when Base Rate is expected to rise further in that period. Even with a fixed rate, having no early repayment charges means the borrower can refinance whenever circumstances suit, without penalty.

Re-mortgage or a second charge?

Why would one opt to take the second charge route rather than re-mortgage?

Lots of reasons actually. For example, many customers have a really good first mortgage deal, maybe a great fixed or tracker rate that they don’t want to give up. Taking a second charge at a higher rate may mean that the blended rate across the whole debt is still lower than a new first deal, so a second charge loan can make good financial sense.

Some borrowers may face a stiff early repayment charge on their first mortgage if they re-mortgage. Others may have had a change in their circumstances which means switching to a bigger first charge mortgage is not an option. Perhaps they started a family or changed jobs resulting in a different source of income. Let’s not forget, second charges can be considerably quicker to complete than re-mortgages, especially with the expanded use of Automated Valuation Models.

Way forward

Second charge loans do not suit every need and it’s vitally important any potential borrower seeks professional independent advice from a qualified adviser. If you would like to discuss a potential loan please do contact one of our fully qualified advisers.