Are expensive loans holding you back?

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 £200 or £250 per month on a loan is really not that unusual these days – and who wouldn’t like £2400 or £3000 a year in their bank account?

Uncertainty is fuelling this behaviour. People in truth aren’t 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 a few years ago.

With interest rates currently at a very advantageous level feeling is they can only go in one direction and that is upwards. There is already some talk of that during 2018 and beyond so the chance to negotiate a fixed rate and save money is looking increasingly attractive for borrowers.

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

Recent surveys show homeowners when raising funds see speed of completion as a major factor. The industry has noted this and worked very hard to reduce lending times and now the average completion can happen within 15 working days. This is a big step forward and goes to prove the lenders take this form of lending very seriously.

Help required?

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

Why second charge lending?

Second charge loans can be used for many reasons, such as a deposit for a new property investment, buy-to-let and re-development of an existing property to name but a few.

Many borrowers now are also viewing second charge loans as a simple and a cost-effective alternative to mainstream lending. A second charge loan is far cheaper in the long run than any unsecured loan, just look at some of the rates on offer from the “payday lenders”.

Many people these days have a lot of expensive short-term loans and credit cards, if you are one do consider alternative loans such as a second charge. Short-term loans and credit cards can have very high annual interest rates so do check to see if you could save in the longer term by switching.

If you want to review your lending do ensure you get the correct advice from a fully qualified adviser as an inappropriate loan can be very costly.

Second charges are fast and can complete in a matter of days as opposed to months on a re-mortgage.

There are many reasons a second charge loan may be preferable over a re-mortgage but there are three key common factors.

  1. a) Your credit history has deteriorated since you took out your mortgage.
  2. b) You currently have a mortgage with penalties to change.
  3. c) Speed of completion.

Second charge loans nowadays come in “all shapes and sizes” and there is likely to be one to fit your needs. The crucial thing is to get professional advice as there are so many options open to homeowners.

Can we assist?

When taking out a new loan you should seek professional advice, we have a team of experts waiting to take your enquiry so please do make contact.

Second charges are a serious alternative

The last five years has seen this type of lending increasing in stature as homeowners become aware of the huge cost of the so called “pay day loan”. For many years a second charge loan was something clients only did as a last resort due to the high costs compared to a re-mortgage. This has changed dramatically recently as lenders have recognised the potential this type of lending has. Second charge loans are quick and normally a lot cheaper to set up than a standard re-mortgage.

Before you decide to re-mortgage do take time to explore the benefits this form of lending can offer. Second charges will not suit every situation, but it is worth getting professional advice to see if this could help you.

Who can benefit from second charge lending:

  • First charge has a tie-in period and has penalties to change
  • Funds required very quickly
  • Have been in arrears with your current lender and want to avoid disturbing your current low rate for a sub-prime mortgage
  • You have an interest only mortgage and you do not wish to re-mortgage to capital & repayment
  • You are benefiting from a low interest rate and do not wish to disturb the current product

Most common reasons for a second charge loan:

  • Want to consolidate outstanding loans and credit cards
  • Want to carry out home improvements
  • Want to inject cash into a business venture
  • Have had adverse credit and wish to speak to a company who understands the situation
  • Are self-employed and wish to raise finance for one of the above

Can we help?

If you would like more information on how this type of loan could help you please do contact and one of our advisers who will be happy to assist.

Mortgage prisoners

Interest-only and older mortgage borrowers have found themselves prisoners of their own mortgage lender. Borrowers in this category are turning to a second charge loan as a solid alternative to re-mortgage as a way of raising cash.

Figures show that there are currently over 2 million people with an interest only mortgage and the majority of those are over 50 years old.

Unfortunately, many of the interest only borrowers, who only pay the interest each month on their mortgage and no capital reduction, find themselves with a problem. Many banks and building societies are now insisting that any re-mortgage be converted to a repayment mortgage, meaning payment of interest and capital. This presents a problem to the more mature borrower as payments each month would increase significantly.

Second charge loan

A second charge loan – or second mortgage as they are known – works in the same way as a mortgage and is secured against your property. As the name suggests it comes second in line behind your existing mortgage deal.

Raising capital

If you need to raise funds without re-mortgaging now is a good time to review your situation as interest rates for second charge lending are at an all-time low. There is a very good selection of plans available from standard rate through to various fixed term deals. It is very important to remember this type of loan will NOT suit every case. It is vital to get expert professional advise as to the correct loan to meet your needs.

Help required?

If you would like to know more please call one of our fully qualified advisers who will be happy to assist.