Very encouraging growth

The finance and leasing association has released data that shows the second charge market expanding on a yearly basis for the sixth month in a row.

In December 2018, there were 1,702 new agreements valued at a total of £80m, growth of 13% and 6% against December 2017, respectively.

This is some way off November’s data, however, when 2,319 new agreements valued at £99m provided a 21% rise for both metrics. In the 12 months leading to December 2018, 23,529 new agreements were recorded at £1.07bn in value. This is a 7% upward change in new agreements within that time frame, and a 4% increase in the value of new business.

December saw the market report its sixth consecutive month of growth, contributing to solid single-digit new business growth in 2018 as a whole. The second charge mortgage market is expected to see further single-digit new business growth in 2019 overall.

It is believed that the sector is more likely to grow at a measured pace rather than a “boom & bust” situation, backed by the increasing numbers of advisers who are now aware of where secured loans can sit in their advice process.

If you look closely at the positives a secured loan can offer a borrower, then it is easy to see why this form of lending is being welcomed by all.

Lender choices

The last 12 months has seen a substantial increase in the number of loan types available to a property owner. Not only this but new lenders have entered the market which has to be good for the long-term growth and stability of the second charge industry.

The broker

These days due to the vast choices open to the prospective borrower it is vital they get a professional adviser to point them in the right direction. With so many loans and re-mortgages available anybody contemplating taking out a loan would be very well advised to seek broker advice.

Can we assist?

If you would like to discuss your future and present borrowing needs, please do make contact and one of our qualified advisers will be pleased to help.

Home renovation?

Home improvements were the most popular reason to take out a second charge loan in 2018 research has found.

Almost half (48%) of customers used some of the funds unlocked from their property towards enhancing homes and gardens.

These figures demonstrate the flexibility of a second charge as a tool for financial planning in retirement, both as a means to unlock wealth in the immediate term and with a view to the future. It is significant how many people are untapping the value of their property to fix-up their home or increase their comfort and security as they grow older.

This significance is even clearer when seen in the context of the latest data, which shows the amount spent by 50-74-year-olds on alterations to their house is at its highest level since at least 2010.

Taking out a second charge to fund home and garden improvements benefits more than just the current occupiers. Such enhancements can add value to the property and help pass on wealth to future generations.

There’s a slight rise in the number of customers who used a second charge loan for home improvements in Q4 2018 (47%) compared with the same quarter in 2017 (46%). Although these figures did not reach the high of Q3 2018 (50%), home improvements continue to be the most popular use for second charge lending.

Elsewhere, more than one in four people used a second charge to manage unsecured debts in 2018 (26%). Last year’s final quarter figure for unsecured debt was also the same as 2018 as a whole, rising slightly from 25% in Q3 2018.

Other popular uses for second charge loans among UK households in 2018 was holidays (22%), day-to-day living (21%) and gifting to family (16%).

Like to know more?

If you would like to know more about second charge loans please do make contact and one of our advisers will be happy to assist.


Second charge rates remain competitive

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 as things could be changing soon.

Second charge loan interest rates have been tumbling for months now. This type of 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.

Second charge mortgages can be particularly useful when a homeowner wants to raise additional funds but does not want to change their existing first mortgage – especially where this involves additional costs.

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.

This form of loan will not suit everybody, but it is without doubt worth exploring with the advice of a qualified adviser. 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.

Need some assistance?

If you think this form of loan could assist you in your future planning it is very important to ensure you get the correct advice. There are many lenders offering numerous second charge loans, please call one of our advisers who will be able to guide you in the correct direction.