Second charge lending has always been a popular choice for people carrying out home improvements. In many instances, where the improvements are likely to result in a significant increase in the house price, it can be beneficial to take a second charge mortgage to pay for the work and then re-mortgage at the higher property value and, therefore, a lower LTV. This approach could help a client benefit from a lower first charge mortgage rate in the long term.
Payment of a tax bill
At this time of year, we also see demand from some clients who want to use a second charge mortgage to pay a tax bill.
Second charge mortgages are becoming a competitive way for borrowers to raise funds on their existing property and it could be possible for a homeowner to raise a second charge on their residential property in order to fund the payment of the tax bill.
A number of lenders are also offering this type of borrowing as an equitable charge, which can sometimes be processed faster than a traditional second charge mortgage.
Lenders will generally want to know why the client didn’t have provision in place to pay the bill and will look for some reassurance that they are able to pay future bills, but there are more providers happy to lend on this basis.
There are many opportunities where a second charge mortgage could be the most appropriate fund-raising solution. But you should seek independent professional advice before committing as making an error can be very costly over the long term.
Can we assist?
When taking out a new loan you should seek professional independent advice, we have a team of experts waiting to take your enquiry so please do make contact.