Why would one opt to take the second charge route rather than re-mortgage?
Lots of reasons actually. For example, many customers have a really good first mortgage deal, maybe a great fixed or tracker rate that they don’t want to give up. Taking a second charge at a higher rate may mean that the blended rate across the whole debt is still lower than a new first deal, so a second charge loan can make good financial sense.
Some borrowers may face a stiff early repayment charge on their first mortgage if they re-mortgage. Others may have had a change in their circumstances which means switching to a bigger first charge mortgage is not an option. Perhaps they started a family or changed jobs resulting in a different source of income. Let’s not forget, second charges can be considerably quicker to complete than re-mortgages, especially with the expanded use of Automated Valuation Models.
Raising funds or borrowing money at any time in life especially nowadays can be very daunting and expensive if you get it wrong. There will be various reason you need to raise cash and many options open to the majority.
First piece of advice to heed is to get professional advice as the wrong loan over a period of time could cost thousands more than you need to pay.
Generally, a second charge or secured loan will be cheaper than one unsecured but again do seek advice as this is not always the case. Using a reputable broker will help eliminate a lot of the questions as they are experienced with all types of lending.
Second charge loans do not suit every need and it is vitally important any potential borrower seeks professional independent advice from a qualified adviser. If you would like to discuss a potential loan please do contact one of our fully qualified advisers.