Why would you consider a second charge mortgage?

There are a number of reasons to apply for a second charge mortgage and they include.

Debt Consolidation

Home improvements/extensions

Helping with University fees

Helping your family with a deposit for their first home

Buy-to-let property purchase

Children’s tuition fees

Payment of a tax bill

Who can apply for a second charge mortgage?

A second charge mortgage is open to a variety of borrowers including contractors, freelancers and self-employed professionals but there are stipulations.

Firstly, and most importantly you must have an existing first charge mortgage on a property already. You must also be 18 years old and over, as well as being employed (be it in a contract or permanent work).

How do I apply for a second charge mortgage?

The second charge loan application process is similar to applying for a re-mortgage.  An independent broker who specialises in offering second charge products will be able to gain access to a panel of lenders to ensure the quote you get is competitive and applicable to your particular set of circumstances. 

Most second charge lenders only accept business through a registered Broker and in nearly all instances, the client does not need to instruct a Solicitor to act for them, which can help expedite the transaction. This is different to re-mortgage applications where a conveyancer/Solicitor is usually required.

Way forward

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

15 months of continued growth.

The second charge mortgage market continues to grow with the value of new business reaching £116 million in November 2019, figures from the Finance & Leasing Association (FLA) show.

This is a rise of 17% from November 2018 with the number of new agreements rising by 14% to 2,594.

In the 12 months to November 2019 new business totalled £1.238 billion, 16% up on the same period the year before while new agreement numbers were up 19% to 27,747.

The second charge mortgage market reported a fifteenth consecutive month of double-digit new business volumes growth in November. The average value of second charge mortgages in November grew by 3% compared with the same month in 2018 to £44,530.

Buy-to-let landlords

Landlords beginning to utilise this method of raising capital which just did not happen in the past. Landlords with good equity within their properties have seen this route of raising capital as quick and very uncomplicated.

Lenders have seen the potential growth in this area, and they have responded very well, offering a good range of flexible loan deals on Buy-to-let properties. Two or three years ago there was only a small choice, plus the rates were a lot higher.

In the years gone by if a homeowner or landlord wanted to raise capital from the equity within their home brokers invariably recommended a re-mortgage. This situation is changing as all parties become more aware of the advantages of a second charge loan has to offer.

If you are looking to release funds tied up within your property it is strongly recommended to explore this type of loan as you could save a good deal of money, especially on legal fees.

Can we help?

If you would like to know more about this form of lending please do make contact and one of our independent advisers will be happy to assist. 

Second charge lending has increased!

Second charge lending has increased in the last twelve months, plus the number of homeowners taking out these specialist mortgages increasing by nearly a quarter.

The value of new business in this area of the mortgage market went up by 25.8% to £111 million in February 2020, according to new figures. Meanwhile, the number of new agreements increased by 24%.

The second charge mortgage market remained buoyant in March and April, as monthly new business reached more than £100 million for the second time this year.

Coronavirus – Looking to raise funds?

We are living in very strange times and many things are not clear, if you are looking to raise funds as and when this crisis is over it is strongly recommend getting the “ball rolling” sooner rather than later.

All experts are predicting there will be a huge surge of lending applications later in the year, so getting your requirements in place now would be a sensible move.

So, what are second charge mortgages?

A second charge loan is, quite literally, a second mortgage. It is a loan which is secured against your home in the same way as a standard mortgage. Homeowners can take a second mortgage out with another lender, so you can shop around to find the best deal.

The loan can be used a bit like a re-mortgage or personal loan to raise additional money for things like home improvements.

Commonly they are used by people who are already on a good first charge rate and don’t want to re-mortgage away from this to raise money. Others use it to avoid paying early repayment charges associated with re-mortgaging or because they have experienced credit problems and may therefore find switching to a new deal tricky.

February’s increase in second charge lending marks the ninth consecutive month of new business growth.

Need help?

If you are considering taking out a new loan against your property please get in touch with one of our fully qualified independent advisers who will be happy to guide you.

Why is there such rapid growth for second charge mortgages?

In these challenging times of financing it has become more important to be able to complete a deal within a set timescale. Second charge finance has grown in status year on year and is going from strength to strength since regulation.

A second charge delivers funding quickly and efficiently which is something high street and private banks just cannot do at a competitive rate.

A recent survey of homeowner’s clearly shows one of the most important ingredients in funding a deal is speed and ease of completion. The survey also discovered that traditional lenders are taking too long to get funds released and deals falter due to this reason.

A second charge can be secured on a property and “sits” behind any first charge mortgage both on private and buy-to-lets. A loan without complications can be completed within 14 working days which is considerably less than a re-mortgage.

If you are thinking of reviewing your finances do consider a second charge if a loan is required. Interest rates and conditions are very competitive when compared to a traditional mortgage.

There is little doubt second charge lending has had its most successful year. The good thing about this is the lenders have taken this on board by expanding products to meet the challenges.

These are indeed very progressive times for the second charge finance market as the industry looks forward to 2020 and beyond.

Would you like to discuss your funding needs?

If you wish to raise a loan secured on a property you own please do make contact and one of our independent advisers will be happy to assist.

Home improvements and the second charge

Second charge lending has always been a popular choice for people carrying out home improvements. In many instances, where the improvements are likely to result in a significant increase in the house price, it can be beneficial to take a second charge mortgage to pay for the work and then re-mortgage at the higher property value and, therefore, a lower LTV. This approach could help a client benefit from a lower first charge mortgage rate in the long term.

Payment of a tax bill

At this time of year, we also see demand from some clients who want to use a second charge mortgage to pay a tax bill.

Second charge mortgages are becoming a competitive way for borrowers to raise funds on their existing property and it could be possible for a homeowner to raise a second charge on their residential property in order to fund the payment of the tax bill.

A number of lenders are also offering this type of borrowing as an equitable charge, which can sometimes be processed faster than a traditional second charge mortgage.

Lenders will generally want to know why the client didn’t have provision in place to pay the bill and will look for some reassurance that they are able to pay future bills, but there are more providers happy to lend on this basis.

There are many opportunities where a second charge mortgage could be the most appropriate fund-raising solution. But you should seek independent professional advice before committing as making an error can be very costly over the long term.

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. 

Coronavirus – Looking to raise funds?

We are living in very strange times and many things are not clear, if you are looking to raise funds as and when this crisis is over it is strongly recommend getting the “ball rolling” sooner rather than later.

All experts are predicting there will be a huge surge of lending applications later in the year, so getting your requirements in place now would be a sensible move.

Second charge lending delivers much 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 1000 homeowners 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 also.

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.

The last financial 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. One major lender commented “The last 12 months has seen huge changes within the second charge market with faster completions being a key factor to winning business”.

There is no doubt second charge lending has 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 independent advisers who will be happy to help.

Coronavirus – Looking to raise funds?

We are living in very strange times and many things are not clear, if you are looking to raise funds as and when this crisis is over it is strongly recommend getting the “ball rolling” sooner rather than later.

All experts are predicting there will be a huge surge of lending applications later in the year, so getting your requirements in place now would be a sensible move.

Second charge interest rates are reasonable and stable

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 independent 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.

Very important when considering taking out a loan

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.

Like to talk over your options?

If you think this form of loan could assist you in your future planning, please call one of our independent advisers who will be able to guide you in the correct direction.

Pre-Coronavirus lockdown lending up 13%

The number of second charge loans agreed in February was 13% higher than the same time last year at 2,435 figures from the Finance and Leasing Association reveal.

However, the data pre-date the covid-19 pandemic hitting the UK and the ensuing lockdown, which put the brakes on the property market.

The volume of loans agreed in February was 9% higher than a year earlier at £107m.

The total number of secured loans agreed over the 12 months to February reached 28,512, an increase of 18% on the previous year.

By value, lending was also 18% higher in the year to February at £1.28bn.

The second charge mortgage market made a positive start to 2020, but the mortgage market faces serve disruption from the impact of the coronavirus on the economy.

Lenders are doing their best to support customers during these unprecedented times, and any customer facing repayment difficulties due to the Coronavirus should contact their lender as soon as possible to discuss the help they need.

Looking to raise funds?

We are living in very strange times and many things are not clear, if you are looking to raise funds as and when this crisis is over it is strongly recommend getting the “ball rolling” sooner rather than later.

All experts are predicting there will be a huge surge of lending applications later in the year, so getting your requirements in place now would be a sensible move.

Like to discuss your lending needs?

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 mortgage, could it help you?

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

Of the minority who were aware what a second charge mortgage was, 28% didn’t understand what the difference between this and a re-mortgage was.

Since April 2017, the second charge market has been 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.

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 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.

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

Like to discuss your lending needs?

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 market is booming in 2020

Coronavirus – If you are looking to raise funds it is still a good time to start the process and keep “ahead of the game”. We are expecting a very busy period once the restrictions are lifted, therefore making provisions now will speed up the release of funding.

The second-charge lending market used to be a reserve option, used predominantly by near-prime and sub-prime audiences, but it has been transformed by regulatory reforms, product refinement and tighter underwriting.

As a result, it has grown substantially in the past three years

Homeowners looking for lending alternatives

In recent years, consumer awareness of second-charge mortgages has been low, and second-charge lending distribution has been reliant on intermediary referrals.

Following the Mortgage Credit Directive in March 2016, awareness of second-charge mortgages among first-charge brokers and financial advisors has increased.

This has led to a rise in referrals from first-charge brokers – a trend expected to endure as their awareness continues to grow.

Interest rates are far lower.

Historically, interest rates for second-charge mortgages were relatively high and less attractive compared to alternatives, such as re-mortgaging.

The decrease in rates from typically more than 10% in 2015 to around 4% in 2019 as a result of continuing low base rates.

This has made them more attractive and has also made large loans more affordable and accessible to a wider audience.

Rates in the market have decreased to such an extent that they are beginning to converge with first-charge rates, resulting in many consumers topping up with a second charge rather than re-mortgaging the entire sum at a potentially higher rate.

Way forward:

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