Confused? 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 or a re-mortgage

You are paying an extremely low mortgage rate.

Thousands of mortgage borrowers in the UK are on exceptionally 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 £30,000 extra, your mortgage lender may offer you the extra cash but insist that you re-mortgage the whole deal onto a higher interest rate.

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 independent advisers will be happy to assist.

Raising funds in a cost-effective way

Have you woken up with a bit of a financial hangover after all that festive spending and the Covid-19 problems?

Perhaps you have got plans for the year ahead and want a cash injection to fund things, or maybe you need a new car or home appliance to get the New Year off to a great start? Well, whatever your reasons for needing a loan, you can now snap one up for the cheapest ever rate.

There is a great choice of loans available these days but do be careful, a lot of the unsecured deals carry heavy interest rates. Secured lending (second charge) can be very cost effective indeed with record low interest rates currently on offer.

They are relatively easy to apply for and funds can be released much quicker than a traditional re-mortgage.

Lowest loan rate on record 2021

This is the lowest that secured loan rates have fallen, which will delight borrowers looking to consolidate their debts. It has come at a particularly difficult time of year for those who may be stressed over their finances and spending too much over Christmas – paying off an expensive overdraft or credit card should become a priority moving into the new year, so these low rates are likely to attract many consumers.

It is worth pointing out that these record-low rate second charge loans are unlikely to be around much longer as experts are predicting general rate rises all round. So if you are looking to raise funds it could be a good idea to act sooner rather than later.

Can we help?

If you are looking to raise funds and require help please do contact one of our independent advisers and they will be pleased to guide you.

More choices in the second charge market

It is without doubt that secured lending popularity is increasing on a daily basis. Second charge mortgages have increased month on month and continue to do so.

Before you take out a loan of any kind make sure you check whether this form of lending could help you.

Unsecured lending (payday lenders) is so expensive when you analyse the annual interest rates on offer. Homeowners are waking up to this fact and switching to the cheaper and safer secured lending option. 

The largest growth area of loans is to the self-employed and the good news is there are plenty of different plans to suit each individual case. Loans can be fixed for various terms which can give peace of mind or you may wish to just take the standard discounted variable rate.

Second charge lending is so easy and quick to secure, lenders are increasing their portfolios at a rapid rate. An average case presented will complete in approximately 18 working days, as you can see this is so much quicker than the standard re-mortgage.

We are seeing different lending plans emerge daily and this can only be good news for the borrower. Interest rates and fees are reducing as lenders see this market as a growth area in the longer term.

Need some assistance?

If you think this type of loan could assist you in your future planning it is particularly important to ensure you get the correct deal to suit your needs. There are many different lenders offering numerous second charge loans so please do call our independent advisers who will be happy to help you achieve the correct loan for your needs.

Homeowners are in a very strong position

The latest data released has revealed that the average value of a residential property across the country is at an all-time high. This information puts the homeowner in a strong position if they are contemplating raising finance and using the home as security.

Homeowners have choices if they wish to raise capital, they could re-mortgage or take out a second charge loan secured on the equity within the property.

Second charge lending has made huge strides in the last 3 years and now should be considered before any decision is made about re-financing your property.

Second charge lending offers a fast and effective way to raise capital at a very reasonable cost. Interest rates and set up costs offered by lenders have reduced significantly over the last couple of years in line with the mortgage market.

In the past re-mortgaging was by far the most popular route taken when fund raising was required but not anymore.

The range of second charge loans are increasing every day with more flexible repayment methods being offered which has found favour with the borrower. Repayment periods are flexible and are generally set to suit the client’s wishes.

Help required?

Please do contact us for any assistance you may require as choosing the correct loan to suit your needs can be a daunting task.