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 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.

If you choose not to get professional advice, you run the risk of taking a loan that isn’t suitable and this could cost you thousands extra in interest payments.

When you’re looking into a second charge mortgage, make sure you:

  • Approach your existing lender and ask them what they would charge for an additional loan.
  • Find out the exact mortgage terms, fees, early repayment charges and rates of interest.

Help required?

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

Sound solid increase in business for second charges

The value of new business for second charge mortgage lending was £242m in the three months leading up to November last year, 11% more than the year before.

There were well over 5,000 new agreements in the three months to November, an increase of 7.2% on the previous year. The market saw £80m of second charge business in November alone, an increase of 3.7% year-on-year.

The second charge mortgage market reported further sustained growth in December, and in the first 11 months of 2017, new business volumes increased by 13.8% compared with the same period in 2016.

Lenders remain focused on fully embedding the new regime, which sees first and second charge mortgages regulated on the same basis. This has helped highlight the benefits a second charge loan can have too many borrowers around the Country.

Broker benefits

Due to the second charge market growing so quickly lenders have produced many new and innovative products to suit most needs. With the loan choices available it is highly recommended for potential borrowers to seek broker advice, a wrong move without advice could cost thousands extra in interest payments. A professionally qualified broker will assess the client needs and recommend the appropriate products accordingly.

Can we help?

A second charge loan will not always be the best advice, please do make contact and one of our fully qualified advisers will be happy to explain the options open to you.

Second charge loans can be very helpful

Years gone by second charge mortgages may have been overlooked or consciously excluded from the options considered by mortgage intermediaries for clients looking to capital raise. The alignment of regulation has led an increasing number of mortgage advisers to explore more deeply the options available to their clients, and with good reason.

In a sustained low-interest-rate environment, there has never been wider availability of low-cost borrowing options for those seeking to re-mortgage.

However, there are groups of borrowers who may need to raise finance but would be financially disadvantaged from the prospect of re-mortgaging away from their current deal.

Interest-only existing mortgage focus

Interest-only mortgage borrowers often find themselves between a rock and a hard place when it comes to further borrowing especially if they want to retain their existing terms. If they re-mortgage, there is a strong possibility they will have to sacrifice their interest-only mortgage. Many borrowers these days can get a nasty shock when they attempt to apply for a further advance from many mainstream mortgage lenders. A practice widely applied by mortgage lenders either requires the borrower to provide proof of their exit strategy for repaying the interest-only loan, or a conversion of their existing mortgage borrowing as well as the new loan amount onto a capital and interest basis. This situation in many cases makes raising capital a non-starter, leaving the client frustrated. This is where a second charge can be a vital alternative.

Second charge to the rescue

A second charge loan would enable them to retain the bulk of their borrowing on an interest-only basis and on their existing terms, whilst taking out the additional mortgage on a repayment basis. With over 3.3 million interest-only mortgages in the UK, a second charge could potentially be of enormous benefit to this group of borrowers.

Can we help?

If you are looking to raise capital against the value of your property please do contact us and one of our advisers will be happy to assist.

Time to clear that debt?

Second charge loans can be a very useful facility for managing overspending and could help resolve debt problems that may have built up over the years. Christmas time always brings extra stress on the family budget, a second charge low cost loan could help elevate some of these problems.

So, if you are thinking of reviewing your borrowing it would be a very good idea to consider a second charge. Please be aware this type of funding will not suit everybody and it is strongly advised to seek professional help before making a final choice.

For those borrowers on a favourable mortgage deal with the first charge lender, they can keep that deal and use a second charge loan to pay off or consolidate their other debts.

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 the customer’s 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.

There is little doubt that this form of lending will continue to grow as it has done over the last few years. The majority of borrowers are waking up to the fact that unsecured lending is far too expensive both in the short and longer term.

Help required?

We have a team of fully experienced advisers waiting to assist you. Please do make contact and start to repair your finances for 2018.

 

Why are second charges growing so quickly?

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 home owner’s clearly shows the most important ingredient in funding a deal is speed and ease of completion. The survey also showed 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.

This time of year always puts pressure on the family budget, so 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 2018.

Need help?

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

 

Homeowners choosing second charges

Homeowners are increasingly turning to second charge mortgages to raise additional funds without having to change their existing mortgage deal.

The second charge mortgage market saw 27.5% growth in lending and transactions in October compared to the same month last year.

It follows a slowdown in September where figures were largely unchanged from 2016 and continues the significant growth of the sector earlier in the year.

According to recent data, 1,880 second charge transactions were completed in October this year with a value of £85m – up 19% and 20% respectively compared to October 2016.

The figures were also notably up on September 2017 where just 1,580 transactions were completed totaling £72.8m.

Cautiously optimistic

Whether it is to fund renovations, help a family member with a deposit, or consolidate household debts, more borrowers taking out second charge mortgages – many at a higher value – and this has led to a strong year for the sector.

The market is cautiously optimistic that this increase will continue into next year, but it is important that brokers and homeowners are aware of the range of specialist financing options on offer.

A second mortgage continues to be a useful option for customers seeking to raise additional funds without wanting to change their existing mortgage. To find out more you should always contact a professional adviser as the options available are vast and varied.

Can we help?

If you are looking to raise funds secured on your property please do make contact and on of our advisers will be happy to help.

 

Second charges continue to grow rapidly

The second charge loan industry has seen progressive growth over the past few years, given it used to be a much less visible sector of the lending market.

The facts are the seconds market grew by 31% in 2016, with the total size of the sector reaching record levels. What is even more astonishing when you realise that the industry has nearly tripled in size over the past three years.

2017 is following the same trend with loan applications and completions up 21%. 

The rate of growth is now slowing down somewhat, which is understandable as greater awareness of the industry and the options it provides is now clearer to homeowners than ever before. This is in large down to brokers and alike taking on board the value a second charge loan can offer clients as opposed to a re-mortgage.

The industry’s huge growth shows property owners have become aware of the ways a second charge loan can help their family or business grow. This type of funding is so quick and easy to complete compared to the long drawn out re-mortgage process.

As the second’s sector continues to build on its successes, we are seeing lenders producing more new products to assist borrowers. These are indeed very good times for the second charge industry and all looks well for 2018.

Can we help?

If you require more information how a second charge loan can help you please call us and we will be happy to assist.

 

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Second charge lending, vital comparisons

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.

Recent changes introduced by the Prudential Regulatory Authority mean we are seeing more buy-to-let second charge loans due to the affordability stresses that have been put in place. The changes also affect second charges; however, lenders are introducing new criteria all the time, including ‘top slicing’ whereby a client can include their personal income and expenditure to assist with affordability shortfalls.

Yet again, this clearly demonstrates the second’s sector to be forward thinking and unwilling to sit back and just do what it has always done, despite its small size in comparable terms.

The message here is simple: If you are looking to borrow money do not ignore the second charge loan option.

 

 

Second charges expanding

Much has been said about the expanding trend of the second charge sector over the past year. Brokers and clients alike continue to be surprised at how competitive rates are and how, in certain circumstances, it can make much better financial sense to arrange a second charge mortgage than to re-mortgage a property.

Since the implementation of the Mortgage Credit Directive, there has been a significant increase in lenders entering the sector. These fresh players not only serve to reduce annual interest rates through the increased competition they bring but also add value to the second charge proposition through innovation in their products.

The attempt to align first and second charge mortgages continue and will always be aided by similarity on fees and rates.

For lenders, a second charge, of course, poses a greater risk than a first charge, so there will always be differences between the rates on offer. That said, with the cheapest published rate starting at just a little over 4% and some lenders offering the potential to secure even cheaper rates based on risk, second charges provide a valid alternative for clients looking to raise additional funds against their property.

Range of deals on offer

 

The Brexit referendum result, coupled with the more potential rises to the Bank of England base rate, means more clients are looking for the security of a fixed rate over a longer term but with the added flexibility to overpay without penalty.

Not so long ago there was not even a fixed-rate option available, with every second charge product at the lender’s standard variable rate. The fact that discounted and fixed rates have been added to product ranges is a testament to the progress of the sector in a relatively short period.

Help?

If you are looking to raise funds against your property please make contact and one of our advisers will be happy to assist.

Get professional help, it pays

A new campaign is being launched very soon to tackle mortgage and second charge loan myths and highlight the importance of professional advice when it comes to taking out a secured loan.

More stringent lending rules are making it tougher to get a mortgage, and yet new research shows that more than half – 58% – of consumers, including many landlords, may end up with the wrong loan, because they are unaware that a mortgage broker can offer a greater product choice than a bank or building society.

This new study found that 22% of respondents thought that brokers and banks have access to the same products, when in fact using a broker can give you access to nearly 15 times as many products.

When asked whether they agreed with a series of statements about mortgage advice, one in six thought their bank or building society would be able to give them access to the same impartial advice as a mortgage broker.

The Mortgage Myths campaign aims to put the spotlight on misunderstandings like these, highlight the valuable role of independent advice from a mortgage broker and encourage consumers to speak to an adviser about their lending options.

As an industry, there clearly is a significant amount of work to be done to change these attitudes, educate consumers and promote the advantages of using a mortgage broker.

Although some consumers appear to believe they have secured the best deal possible by going directly to their lender, without speaking to a broker they could be missing out on thousands of lending products that might be even better suited to their needs.

Like to know more?

Please do make contact and one of our fully qualified independent advisers will be happy to help.