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.

Going from strength to strength

There were 1,945 new second charge agreements in January this year, up 18% year-on-year, the Finance and Leasing Association (FLA) has found.

In the three months to January there were 6,015 new second charge agreements, up 18% from the previous year. In the 12 months to January there was 23,829 new agreements, up 8% year-on-year.

The value of new second charge business was £85m in January 12% more than the year before and £264m of new business in the three months to January, up 13% year-on-year.

The second charge mortgage market has made an impressive start to 2019, with new business up 12% by value and 18% by volume in January, compared with the same month in 2018. This is a strong performance, and as most of the market is broker-introduced, it also suggests that knowledge of second charge mortgages among clients is growing very quickly.

One of the big appeals of a second charge loan is the costs and speed of completion. On average a second charge loan is completed within 15 working days, this does of course vary dependant on the complexity.

There is little doubt second charge lending has just had its most successful year, 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 qualified independent advisers who will be happy to help.




Second charge range growing

There Is little doubt that second charge lending popularity is increasing on a daily basis. Second charge mortgages have increased this year month on month and continue to do so as more people become aware of just how advantageous they can be.

This type of lending is so easy and quick to secure lenders are increasing their portfolios at a rapid rate. An average case presented will complete in approximately 14-21 working days, as you can see this is so much quicker than the standard re-mortgage.

Different lending plans are emerging daily and this can only be good news for the borrower. Interest rates and fees have reduced considerably as well as lenders see this market as a growth area in the long 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.



Economic uncertainty drives second charge market

Increases in the second charge loan market suggests economic uncertainty is causing more people to improve their current property rather than move.

Data shows there has been an 8.9% increase in people applying for second charge finance in the second half of 2018, when compared to the same time in 2017.

Figures also show that 51% of these second charges were applied for to make home improvements.

In addition, reports show a 9.2% increase in re-mortgage applications in January 2019 compared to the same period last year. This is reinforced by the ONS reporting in their December House Price Index that the rate of increase in UK house prices is 2.1%, the lowest UK annual rate since August 2013.

With an increase in re-mortgage applications, slump in the UK housing market and uncertainty around our economy, this could suggest more people are choosing to improve their current properties – rather than take a potential financial risk of moving.

It could be that Brexit worries are flattening the property market, meaning fewer people are moving and more homeowners are making improvements to their current properties rather than move during a time when it is still unclear how Brexit will affect property prices.

If you are looking to raise funds it’s important to consider a second charge as a solution for a refinancing or home improvement.

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.




Average borrowing 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 most will probably 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 v Second charge

So, 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 totally. 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.

Like to know more?

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

Second charge lending increasing momentum

The number of loan applications increased by nearly 23% in the quarter ending December 2018 compared to the Q3 ending September 2018. This year has continued on the upward trend as consumers become more aware of how a second charge loan could benefit them.

It would seem the UK homeowners are very keen to reduce expensive debt (credit cards and un-secured loans) so as to free up monthly funds.

Benefits of second charge lending?

  • 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.
  • Self-employed and contract workers

Choosing a lender

There are an increasing number of second charge lenders entering the market and choosing one can be a minefield, getting professional independent help selecting is highly recommended.

A broker will take time to understand your needs and be able to place your application with the lender matching your requirements. This is vital as selecting the wrong loan or lender could be very expensive in the long term.

Like too 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.



Very encouraging growth

The finance and leasing association has released data that shows the second charge market expanding on a yearly basis for the sixth month in a row.

In December 2018, there were 1,702 new agreements valued at a total of £80m, growth of 13% and 6% against December 2017, respectively.

This is some way off November’s data, however, when 2,319 new agreements valued at £99m provided a 21% rise for both metrics. In the 12 months leading to December 2018, 23,529 new agreements were recorded at £1.07bn in value. This is a 7% upward change in new agreements within that time frame, and a 4% increase in the value of new business.

December saw the market report its sixth consecutive month of growth, contributing to solid single-digit new business growth in 2018 as a whole. The second charge mortgage market is expected to see further single-digit new business growth in 2019 overall.

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 a 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.

Home renovation?

Home improvements were the most popular reason to take out a second charge loan in 2018 research has found.

Almost half (48%) of customers used some of the funds unlocked from their property towards enhancing homes and gardens.

These figures demonstrate the flexibility of a second charge as a tool for financial planning in retirement, both as a means to unlock wealth in the immediate term and with a view to the future. It is significant how many people are untapping the value of their property to fix-up their home or increase their comfort and security as they grow older.

This significance is even clearer when seen in the context of the latest data, which shows the amount spent by 50-74-year-olds on alterations to their house is at its highest level since at least 2010.

Taking out a second charge to fund home and garden improvements benefits more than just the current occupiers. Such enhancements can add value to the property and help pass on wealth to future generations.

There’s a slight rise in the number of customers who used a second charge loan for home improvements in Q4 2018 (47%) compared with the same quarter in 2017 (46%). Although these figures did not reach the high of Q3 2018 (50%), home improvements continue to be the most popular use for second charge lending.

Elsewhere, more than one in four people used a second charge to manage unsecured debts in 2018 (26%). Last year’s final quarter figure for unsecured debt was also the same as 2018 as a whole, rising slightly from 25% in Q3 2018.

Other popular uses for second charge loans among UK households in 2018 was holidays (22%), day-to-day living (21%) and gifting to family (16%).

Like to know more?

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