Second charge interest rates are still very advantageous for homeowners.

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, there is a feeling amongst the experts this trend could soon be reversed.

Second charge loan interest rates have been tumbling for months now. A second charge 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 serious alterative to the once traditional re-mortgage.

One thing you should do if you are contemplating taking out a new loan is to consult an experienced professional independent adviser as this form on loan will not suit everybody.

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. More and more innovative products are coming onto the market all the time which has to be good news for the consumer.

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 expensive over the longer term so do seek independent professional advice.

Need some assistance?

If you think this form of loan could assist you in your future planning, please call one of our independent advisers who will be able to guide you in the correct direction.

Second charge loans and the advantages

Years gone by second charge mortgages may have been overlooked or consciously excluded from the options considered by mortgage intermediaries for clients looking to capital raise.

The alignment of regulation has led an increasing number of mortgage advisers to explore more deeply the options available to their clients, and with good reason.

In a sustained low interest rate environment, there has never been wider availability of low-cost borrowing options for those seeking to re-mortgage.

However, there are groups of borrowers who may need to raise finance but would be financially disadvantaged from the prospect of re-mortgaging away from their current deal.

Interest-only existing mortgage focus

Interest-only mortgage borrowers often find themselves between a rock and a hard place when it comes to further borrowing especially if they want to retain their existing terms. If they re-mortgage, there is a strong possibility they will have to sacrifice their interest-only mortgage. Many borrowers these days can get a nasty shock when they attempt to apply for a further advance from many mainstream mortgage lenders. A practice widely applied by mortgage lenders either requires the borrower to provide proof of their exit strategy for repaying the interest-only loan, or a conversion of their existing mortgage borrowing as well as the new loan amount onto a capital and interest basis. This situation in many cases makes raising capital a non-starter, leaving the client frustrated. This is where a second charge can be a vital alternative.

Second charge to the rescue

A second charge loan would enable them to retain the bulk of their borrowing on an interest only basis and on their existing terms, whilst taking out the additional mortgage on a repayment basis. With over 3.3 million interest-only mortgages in the UK, a second charge could potentially be of enormous benefit to this group of borrowers.

Can we help?

If you are looking to raise capital against the value of your property please do contact us and one of our independent advisers will be happy to assist.

Lenders and borrowers alike think the second charge market has many positives

Second charge lenders in the UK are positive about the future, the majority are expecting this sector of the mortgage industry to grow rapidly according to a new lending survey. Borrowers also expressed a very positive view.

The upbeat outlook from the lenders suggests that the use of second charge loans as a financial tool for homeowners to raise capital is becoming far more established.

Some 78% of lenders expect their business turnover to grow by at least 17%. In addition, they are positive about the prospects of providing a better and quicker turnaround of business as they streamline the application process.

However, they are slightly less optimistic about the long-term prospects of the UK economy, positivity has decreased.  The survey report says that this is likely due to the Covid-19 pandemic and the uncertainty of the of the Brexit conclusion.

Lenders are split about the direction of property prices, with 57% expecting slight growth and 43% expecting prices to fall.

The majority remain cautious about future prospects for the UK in a very uncertain world, in which the economic climate can change overnight, lenders are confident that they will continue to prosper.

These finding would seem to support the real boom in second charge lending. There is little doubt a second charge loan when used correctly can be a very good avenue of raising funds for the homeowner.

Like to know more?

If you wish to raise funds using your home as security, please do make contact and one of our independent advisers will be happy to assist.

The great British DIY season will soon be with us.

Almost half of the UK’s homeowners are planning a home improvement project in the spring/summer, according to recent research. Each homeowner on average will spend £5000 from their savings pot to pay for it.

Almost a quarter of people making home improvements are planning to draw on their savings (22%) with the remainder borrowing to fund the work.

A total in excess of £30bn is set to be spent on DIY projects in the next few months alone.

Most popular

Decorating is the most favoured DIY job, with 41% of homeowners planning to get the paint brushes out before December arrives.

A savvy 18% of respondents are taking advantage of gardeners being quiet and commissioning landscaping projects to get their garden in shape for 2020.

And for 12% of respondents, upgrading the kitchen is the top priority, even if it adds to the domestic chaos during the summer months.

Fund raising

Using a second charge loan is likely to offer better rates of interest as the loan is secured on your property.

Unsecured loans from high street banks and other sources can be notoriously expensive, we have all seen the rates charged by the so called “pay day” lenders.

The reason for a secured loan being more cost effective is due to the lender having to assess the risk. If you are a high-risk borrower they will need to offset the risk with higher interest rates. So, if you offer security, then the risk involved is much lower and the lender will offer far better rates.

This is indeed particularly useful for those special groups such as the self-employed, retired or those who have had past credit problems.

Why choose a second charge loan?

  1. Faster to complete than a traditional re-mortgage.
  2. Normally less fees.
  3. Extremely attractive interest rates.
  4. Loans are very flexible.
  5. Ability to retain current mortgage deal if on a low rate.
  6. Helps the self-employed

Need some assistance?

If you think this type of loan could assist you in your future planning it is especially important to ensure you get the right one to suit you. There are many different lenders offering numerous second charge loans so please do call one of our independent advisers.