Second charges coming of age

With lenders offering lower rates and the majority of brokers charging lower fees, today’s second charge borrower has access to a very real alternative to a re-mortgage or further advance.

Indeed, second charges are having something of a renaissance. The renewed and growing interest from the intermediary market can be demonstrated by significant growth in both second charge loan volume and value during the past year.

Figures recently released by the Finance & Leasing Association reveal that second charge mortgage business increased in July by 21% in value and 23% in volume, compared with the same period last year.

What is more, consumers are beginning to gain awareness of the second charge option and to understand how it can assist them.

All of that said, a gap in understanding lingers, with a recent survey showing that many consumers remained either unaware or cautious of the sector.

Who can benefit taking out a second charge?

Second charge mortgages are not necessarily the best option for every client wishing to capital raise. Typically, they prove useful for clients who are:

  • Tied into a fixed mortgage with restrictive early repayment charges
  • Benefiting from an existing low mortgage rate
  • Being offered a further advance with a higher rate
  • Currently on an interest-only mortgage product
  • Being declined on affordability for capital raising
  • Wishing to capital raise for business purposes, inclu­ding deposits for buy-to-let mortgages
  • Recently self-employed or contract workers; or
  • Recently retired.

Second charges also offer criteria advantages, such as higher loan-to-value borrowing.

Like to know more?

If you would like to discuss your borrowing options please do make contact and one of our fully qualified advisers will be happy to assist.