Raising Capital? Have You Considered A Remortgage or Second Charge Mortgage?

Wednesday, October 19th, 2016

This month, here at Caboodle Finance’s Sutton Coldfield office, we thought we would look at the some of the changes that have taken place to the Secured Loans marketplace since the introduction of the Mortgage Credit Directive (MCD) in March 2016

Whilst the MCD effectively harmonised the regulations concerning both the first charge mortgage and the second charge mortgage markets (previously referred to as secured loans or second charge loans), this much heralded change has not led to a reduction in the numbers of people choosing to raise capital in this way.

Second Charge Mortgages

Historically, a very high percentage of “second charge loans” involved an element of debt consolidation whereby customers were using some or all of the monies raised to clear existing credit arrangements such as credit cards, loans, store cards etc. Although second charge mortgages (as they are now called) are still being used for this purpose, most people raising capital in this way are doing so primarily for home improvement projects. However, many still include an element of debt consolidation given that this process alone can release enough disposable income to contribute, or sometimes even fully cover the new monthly repayments on the proposed secured loan itself.

Secured Loan or Remortgage?

In many instances a secured loan (which simply sits as a separate loan ranking behind the existing mortgage) may be more appropriate solution for raising the capital than a remortgage (which usually involves moving to another lender). Industry commentators and secured loan have suggested that the combination of low interest rates and the recent slowdown in the rate of property price growth has resulted in many more people “improving not moving”. In fact, increased competition between lenders in the second charge marketplace has resulted in some great deals being available for those who may be ready, willing and able to take advantage of them.

Finding the best solution

The challenge for many is that it can be very difficult to determine which of the three options (remortgage, further advance or second charge mortgage) is most appropriate in all the circumstances. This process can be made much easier by engaging the services of a specialist mortgage broker who will give independent advice and who will often have access to a comprehensive panel of lenders, many of whom will not be accessible via the high street.

In summary, a really great professional adviser should be able to guide prospective clients as to their best options in all circumstances. Call Caboodle Financial Services Limited today on 0800 151 2407 or just click HERE to email us and we will be delighted to help you make the right decision.

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Your initial consultation is free and you are under no obligation to proceed with a mortgage we recommend. There will be a fee for mortgage advice. The exact fee will depend on your circumstances and may be reduced depending on the loan amount and any commission we receive from the lender. It is estimated that the fee will be £595, but it may range from £495 to 1% of the amount you borrow. The fee is only payable on completion and can normally be added to the mortgage. This will be discussed and agreed with you before you make an application. Please ask for a personalised illustration.

Secured loan rates from 3.95% APRC, although we have plans available up to 29.9% APRC which allow us to assist customers with the most severe credit problems. The overall cost for comparison is 7.65% APRC. There will be a fee for secured loan advice and the exact fee will depend on your circumstances. The fee is only payable on completion and can normally be added to the loan. A lender fee may also apply. The actual APRC available will depend on your circumstances. All loans are subject to status. Please ask for a personalised illustration.

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Caboodle Financial Services Ltd, registered in England and Wales at Mere Green House, 46-48 Mere Green Road, Sutton Coldfield, West Midlands B75 5BT (number 08044670).
Caboodle Financial Services Ltd is an appointed representative of PRIMIS Mortgage Network (PRIMIS), a trading name of Advance Mortgage Funding Ltd which is authorised and regulated by the Financial Conduct Authority. PRIMIS is only responsible for the service and quality of advice provided to you in relation to mortgages, protection insurance and general insurance products. Any other product or service offered by Caboodle Financial Services Ltd may not be the responsibility of PRIMIS and may also not be subject to regulation by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let.

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