Second charge loans & consolidating debt to ease pressure

Covid-19 has left many people financially worse off with debts increasing.

One of the many advantages of debt consolidation is that when done properly it lowers the total amount of interest you are paying.

The idea is to consolidate higher interest debts into a single loan with a lower rate. So, the first question to ask is what makes up the bulk of your debt?

If most of what you owe is on high-interest credit cards, you may be a suitable candidate for debt consolidation. Credit card interest rates can run anywhere from 9% to 35% or more. Debt consolidation loans structured as secured loans against property almost always offer significantly lower rates.

Sometimes interest rates and terms are not the two most key factors for debt consolidation. Sometimes the simple matter of needing more money to pay your monthly bills is the priority. So, your next question is whether you absolutely need a lower monthly payment.

Take a look at your budget. If your finances are taken to the brink of disaster every month, you have no room for emergencies or unforeseen expenses. In your case, debt consolidation would also be a good idea if it could substantially lower your monthly outlay. It is better to pay more interest over the long term than face continued problems because you cannot pay monthly bills.

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.

Vitally important – get professional advice!

If you are looking to raise funds on the equity within your property please do contact us and one of our independent advisers will be happy to assist.

Second charge lending reached £123.6m in October, an increase of 74% from £71m the same month last year

October lending was 12% higher than September’s figure of £110.2m, taking the total for 2021 up to £924.6m, meaning it is “almost guaranteed” to surpass £1bn by the year end.

The number of completions jumped 56% year on year to 2,839 in October, marking a new record.

Lending was boosted by new entrant Selina Finance and the removal of almost all pandemic restrictions.

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.

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.

October lending was 12% higher than September’s figure of £110.2m, taking the total for 2021 up to £924.6m, meaning it is “almost guaranteed” to surpass £1bn by the year end.

The number of completions jumped 56% year on year to 2,839 in October, marking a new record.

Lending was boosted by new entrant Selina Finance and the removal of almost all pandemic restrictions.

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.

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.

2nd Charge lending is very popular

When the pandemic took hold last year, a host of second-charge lenders pulled back on their lending. As a result, the market struggled. However, there’s no denying that the second-charge market is now booming. In fact, the latest figures from the Finance & Leasing Association show that in September this year new business agreements jumped by 67% to nearly 2,500, while the value of new lending increased 78% to £102m.

These aren’t one-offs either. In the three months to the end of September, both the number of new second-charge agreements and the value of those deals are up by more than 100% on the same point last year, while on an annual basis they are both up by more than 10%.

There is a pretty clear message there. Not only has the second-charge market bounced back from the challenges of COVID, but it’s also now at pre-pandemic levels. What’s more, the momentum isn’t ending – the FLA said it fully expects new business volumes to grow over the remainder of the year as demand is so solid.

Changing circumstances

There are plenty of different reasons for why the second-charge sector is looking so positive at the moment, but the strength of that demand from borrowers is a significant one.

The last couple of years has had a real impact on the finances of millions of homeowners and making use of the biggest asset they own – their home – in order to correct that makes sense.

It’s no secret that scores of clients have taken on additional forms of debt to get through the pandemic, but now that the economy – and perhaps their personal circumstances – look to be on an upward trajectory, they may want to explore their options for consolidating those debts into a single monthly payment.

Equally, there will be plenty of homeowners who have realised their current home doesn’t quite meet their needs, but they don’t have the appetite – or the funds – to purchase a new one, and so instead want to improve what they already have.

It may be converting an attic to build a new bedroom for a growing family, or perhaps adding an extension which can serve as a home office now that they spend a portion of the week working from home. That sort of home improvement project will likely require some serious funding too.

Second charge loan/mortgage explained

A mortgage is no more than a secured loan against an asset by way of a lien. A second charge works in exactly the same way.

In other words, a lender loans money to a borrower so that he / she may buy a property. The loan is conditional upon a variety of terms, one of which is the defined collateral for the debt. In this instance, collateral is another name for ‘security’ and this is secured by way of a lien.

The registration of a loan against a property’s title is referred to as a ‘charge’.

Most properties have only one debt registered against them (because most people take out only one loan when purchasing a property) although sometimes a borrower might extend or add to his or her mortgage during its term in order to raise money, perhaps for a home extension – or a child’s wedding.

From time to time, a homeowner might be unable to raise money through their primary mortgage lender due to their circumstances or the criteria set by the lender. In these cases the homeowner may wish to borrow money, but he cannot borrow it from his existing lender. In these circumstances, it is possible to raise more money by way of a secured loan, with a different lender. It is normal for the new lender to take a second charge against the borrower’s property.

A second charge is a secured loan, but it will have less precedence than a first charge. If the borrower defaults on either the first or second charge, either lender can instigate repossession proceedings. However, the first charge lender gets their money first, and there may not be enough money left to repay the second charge lender. In this case, the lender will have to look at other ways to reclaim their outstanding debt.

Re-mortgaging? take a look first.

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.

Second charge lending continues expanding to meet needs

The majority of homeowner at some stage of ownership will want to raise extra cash for a venture they have in mind. Raising those funds can be very confusing as many people just do not understand what options are available to them. Ever more popular these days is to raise funds secured on the family home, known as a second charge which is a loan that sits behind the current mortgage secured on the property.

 Second charge market  

Much has been said about the upward trend of the second charge sector over the past year. Brokers and clients alike continue to be surprised at how competitive the rates of interest are plus the wide range of products on offer.

Currently the interest rates on offer are very competitive with some lenders offering the potential to secure even cheaper rates based on risk, second charges provide a valid alternative for clients looking to raise additional funds against their property.

Getting advice is absolutely essential

Very simply the best thing to do if you wish to borrow money is to get independent advice from a fully qualified broker, the independent broker will have access to all loans available to you and will guide you in the correct direction.

Range of deals on offer

Not so long ago in the “seconds market” there was not even a fixed-rate option available, with every second charge product at the lender’s standard variable rate. The fact that discounted and fixed rates have been added to product ranges is testament to the progress of the sector in a relatively short period.

Help?

If you are looking to raise funds against your property please make contact and one of our fully independent advisers will be happy to assist.

Second charge loan choices are increasing – especially for the self employed

Secured lending popularity is increasing on a daily basis. Second charge mortgages or secured loans have increased this year month on month and continue to do so as the year progresses.

The biggest growth area of loans is to the self-employed and buy-to-let landlords, the good news is there are many 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 variable rate.

This type of lending is so easy and quick to secure, lenders are increasing their product portfolios at a rapid rate. Speed of lending is always a key issue for borrowers and a straightforward case can complete in approximately 16 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 well, lenders see this market as a growth area in the longer term.

This is a rapidly expanding area of lending and products are increasing to match the demand. Borrowing money these days is a complex issue and it is vitally important to get the right one that meets your needs in both the short and long term. It is always recommended to seek professional advice when taking out any form of loan.

Need some assistance?

If you think this type of loan could assist you in your future planning it is very 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 advisers who will be happy to help you achieve the correct loan for you.

Huge increase in 2nd charge lending

The number of second charge loans taken out in August was up by 103% year on year to 2,214, according to the latest statistics from the Finance and Leasing Association.

By value, second charge business was 118% higher compared to a year ago at £95m.

However, month-on-month, second charge lending was down 6% by value and 5% by volume from £101m and 2,433 loans in July.

Looking at the year to the end of August, the total value of loans was 1% higher than the previous 12 months at £956m.

The number of loans over the same period was 5% higher than the previous year at 22,880.

The second charge mortgage market continued its recovery from the pandemic in August. 

The market has reported more normal levels of new business in recent months which we expect to continue in the final quarter of 2021.

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.

Economic uncertainty is driving the second charge market

Increases in the second charge loan market suggests economic uncertainty is causing more people to improve their current property rather than move.

Data shows there has been an 8.9% increase in people applying for second charge finance in the second half of 2021, when compared to the same time in 2020.

Figures also show that 51% of these second charges were applied for to make home improvements.

In addition, reports show a 9.2% increase in re-mortgage applications in September compared to the same period last year.

With an increase in re-mortgage applications, slump in the UK housing market and uncertainty around our economy, this could suggest more people are choosing to improve their current properties – rather than take a potential financial risk of moving.

It could be that Covid-19 worries are flattening the property market, meaning fewer people are moving and more homeowners are making improvements to their current properties rather than move during a time when it is still unclear how Covid will affect property prices.

If you are looking to raise funds it’s important to consider a second charge as a solution for a refinancing or home improvement.

Like to know more?

Our independent advisers are fully trained and skilled in all areas of lending so please do contact us to discuss any requirements you may have.

Second charge lending is forging ahead

Second charge mortgages are becoming a progressively more competitive way for borrowers to raise funds on their existing property, and product innovation means that there are more ways for clients to access a second charge mortgage.

For example, a growing number of landlords are choosing to raise capital with a second charge on a buy-to-let property and there is a growing range of options for clients.

We are also seeing a rise in second charge mortgages that take an equitable charge on the property. With an equitable charge, the lender does not take a legal stake in the property, but instead is given the right for a judicial process of recovery, which means that an equitable charge can be used where the first charge lender declines their consent to a second charge being registered. It even means that equitable charge mortgages are available to clients who have bought their home using a Help to Buy loan.

Therefore, with the growth in the availability and diversity of second charge mortgages, here are four frequent opportunities where a second charge mortgage might just prove to be the most suitable solution for a client.

Low legacy rate or interest-only

There are many borrowers on a lifetime tracker or variable rate that is so low that they would be unable to match their current rate by re-mortgaging. For clients in this situation who want to raise extra money from their property, it can sometimes be more cost-effective to use a second charge loan to borrow the money, rather than shift the entire balance onto a more expensive rate.

Need some assistance?

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