Second charges forging ahead

We are seeing more and more second charge loans forging ahead. Encouragingly, completions for April alone were £79m – 53% higher than in April 2016.

The sector is pushing to break annual lending of £1bn for the first time since the recession.

Pricing is easiest to change and it has fallen at all LTVs, with starting rates now at a little over 4%. Product diversification is at its highest ever level offering a product to suit the majority of client needs.

Since the MCD, affordability checks have standardised with those of first charges. Prior to this, a major advantage of second charge over further advance or re-mortgage was increased loan-to-income ratios. In retrospect, it seems crazy for a second charge loan, normally with a higher interest rate, to be permitted at higher LTI ratios. But this was a result of softer regulation outside the FCA and the need to offer an advantage over the other options.

Further benefits remain, such as higher loan to value interest-only, lending with adverse credit, unusual property type and no or low early repayment charges, but these are relatively specialist in comparison.

In today’s market, second charges are chiefly preferred for their economic advantage over the short to medium term.

Borrowers who would trigger an early repayment charge (ERC) or lose low interest rates in order to raise capital are better off taking a second charge, then refinancing either once the ERC ends, the current product expires or the Bank rate is expected to increase.

Virtually all second charge lenders have embraced automation now. Calculation of affordability has been hugely simplified and made more accurate, which can be tailored to region, family size and a host of other factors.

Need to know more?

If you would like to know more about raising capital please do make contact and one of our qualified advisers will be happy to help.



Second charges grow rapidly

The second charge loan industry has increase rapidly over the last 2 years setting numerous records along the way for business conducted.

The facts are the second charge loan market has rapidly increased by a massive 31% in 2016, with the total size of the sector reaching record levels. What is even more astonishing when you realise that the second charge lending market has nearly tripled in size over the past four years.

2017 is following the same trend with loan applications and completions up by a further 9.7% on the year to date.

The vast majority of high street banks and standard lenders still continue to show a reluctance to lend on a second charge basis leaving the door open for the specialist lenders. Second charge finance has provided an invaluable resource to those looking to secure finance for their projects quickly and cost effectively.

The industry’s huge growth shows consumers are becoming aware of the ways second charge loans can help their financial situation.

As the second charge sector continues to build on its successes, we are seeing lenders producing more new products to assist the borrower. These are very exciting times for the industry as it looks forward to 2017 and beyond.

Like to know more

If you require more information of how a second charge loan can help you please call us and we will be happy to assist. We have fully qualified advisers waiting to take your call.


Aware of Second Charge

Are you aware?

Second charge mortgages are widely available through specialist lenders, yet this 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, 30% didn’t understand what the difference between this and a re-mortgage was.

Since April, 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. Previously they fell under the FCA’s consumer credit agreement.

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.

Can we help?

 If you would like to know more about raising funds from the equity within your property do make contact, one of our fully qualified advisers will be happy to assist.



Second charge rates fall again

A recent survey of lenders has shown second charge loan interest rates are decreasing, this is no doubt due to the competition within this fast-growing market. Lenders are keen to secure new business and this is driving rates and fees downwards. More lenders are finding ways of attracting business and this is often reflected in the charges, which means it is worth shopping around for the most favourable deal.  It’s a very good time to be a borrower at present with such low rates on offer, also applications are completing much quicker than years gone by.

Second charges have many plus points especially if your first charge loan is a fixed or a beneficial tacker deal. It is very wise to seek professional help these days if you are looking to take out a new secured loan as the options are vast.

Speed of completion

Last year saw a significant reduction in the time it takes to complete a second charge loan, more good news for the borrower. On average a lender estimates to complete on a “clean case” within 28 days and on some occasions this can be even quicker.

This form of loan is growing in stature all the time and is now a very serious alternative to a traditional re-mortgage which will never complete as quickly.

Need to know more?

If you are looking for more information regarding second charge lending please do call one of our fully trained advisers. We are here to help and look forward to being of assistance.



Consolidate expensive debt

The early part of 2017 saw a sharp rise in the number of mortgage advisers looking for second charge loans for clients concerned about their expensive long-term debt.

According to figures from the Bank of England, Brit’s personal debt grew 11% in the year to 30 November 2016 to stand at £193bn – 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 brokers to help their clients consolidate their debts.

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 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.