Second charge awareness

The second charge mortgage market must keep pushing the education message if it wants to continue to progress

Second charge loans are still increasing but not at the rates all experts had predicted. It’s a niche market of course, but it needs to be a bigger niche market. The influx of business all expected post-MCD has not happened and there is a need to do a better job in terms of educating the consumer. For some it’s still seen as a loan of ‘last resort’ and that should not the case.

All agree that second charges could fill a vital function: a second charge mortgage is a good way to help with debt consolidation; Saving money in both the long and short term if used correctly.

It seems there is a hangover with second charges in that they are viewed as expensive products, which they are not compared to unsecured alternatives.

Second charge loans are very flexible these days and offer a vast range of products to suit the majority of needs.

Before you take out a loan do seek professional advice as to what loan would suit your needs. The range of secured loans is daunting if you are not an expert and making a mistake with the wrong one could be very costly.

Can we assist?

If you would like advice with your next loan, please get in contact and one of our advisers will be happy to help.

second charge

Self-employment on the increase

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 15% 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.

Interesting facts about who are self-employed:

The number of over 65s who are self-employed has more than doubled in the past seven years to reach nearly half a million

The number of women in self-employment is increasing at a faster rate than the number of men (although men still dominate self-employment).

Loans available to the self-employed:

Standard mortgage

Secured second charge loan

Unsecured loan

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






What is a second charge mortgage?

A second charge mortgage is a loan borrowed against your home, on top of your existing mortgage. As the second charge is secured against your property, you need to have sufficient equity in your home to support the loan.

If you were ever to default on your repayments and 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 usually charged at slightly higher interest rates than mortgages. But they are a great deal cheaper than unsecured personal loans that is for sure. So, it is obvious why you might choose a second charge over a personal unsecured loan. But why would you consider a second charge loan, rather than simply re-mortgaging and borrowing more on your first charge loan?

Second charge loan v re-mortgage 2 examples

1.You are paying a very low mortgage rate.

Thousands of mortgage borrowers in the UK are on very low lifetime tracker mortgages taken out pre-2008, paying less than 2%. If you are on one of these deals and you want to borrow, say £50,000 extra, your mortgage lender may offer you the extra cash but insist that you re-mortgage the whole deal onto a higher interest rate.

In this instance, it makes sense to keep your existing borrowing at the lower rate guaranteed for the life of your mortgage, and just borrow the extra £50,000 as a second charge at a higher rate.

  1. You need a quick turnaround.

It can take several weeks to organise a re-mortgage. If you require extra finance in a hurry, going for a second charge will be the quicker and cheaper option available to you.

Can we help?

Need to know more? Please do contact us and one of our advisers will be happy to assist.

second charge mortgage


Rising second charges

A significant rising number of people taking out a second charge loan to improve their existing homes could hit the new-build property market during 2017.

Some of the UK’s major house builders had been predicting a slowdown in completions during 2017, and that had been further evidenced by an increase in second charge loan applications as more people sit tight and improve their existing property.

Lenders are very aware of this situation and are monitoring it very closely as they want to keep pace with this growing trend.

Anyone who is looking to make some savings this year or to cut back on their outgoings will be looking very closely at any expensive loans they have. This year has seen households around the country taking out second charge loans to reduce overall expensive debt.

Making a saving of £100 or £150 per month on a loan is really not that unusual these days – and who wouldn’t like £1,200 or £1,800 a year in their bank account?

Uncertainty is fuelling this behaviour. I don’t think people are really that bothered by Brexit or the Trump effect – the truth is many people are feeling the pinch and have less money than they did have.

With interest rates at a record low level they can only go in one direction and that is up. There is already some talk of that during 2017 so the chance to negotiate a fixed rate and save money is looking increasingly attractive for borrowers.

Can we help?

If you require some help with your borrowing please do make contact and one of our advisers will be happy to assist.