Second Charge Mortgages – an Important Consideration for Many Homeowners

Tuesday, December 14th, 2021

After a very uncertain period during which the pandemic has significantly impacted all our lives, there are now signs that the second charge mortgage market is set to make a real comeback.

Some people may wonder why this is relevant, but it is highly likely this market will become very much more important to the homeowners who are tied to a low 5-year fixed rate they will have taken out during the period in which mortgage interest rates have been at record lows.

That said, where more people decide to extend or improve their existing property rather than try to find a new property in a market where housing stock is low, access to additional borrowing is likely to rise. 

For some, the obvious solution may be to get extra money from their existing mortgage provider. However, those borrowers who may already be up to their limit with the mortgage lender may need to seek the capital elsewhere.

Avoiding Early Repayment Charges

In the latter scenario, whilst moving to another lender for a remortgage may be possible, during the fixed-rate period on their existing mortgage, there is likely to be a significant penalty (referred to as an Early repayment Charge or ERC) for leaving that lender early in favour of another. 

This penalty can be avoided by considering a second charge mortgage or unsecured loan to finance the improvement project. 

Unsecured Loan or 2nd Charge Mortgage – Which is Right for You?

The decision on which route to explore could be determined by several important key factors, which include:

There are benefits for each type of borrowing and of course, the second charge mortgage is secured against property, so the risk of default has significantly deeper consequences. However, because of this, there is significantly more flexibility in their approach when considering applicants.

Get Specialist Mortgage Advice

Given all this, many homeowners looking to raise capital use the services of a specialist mortgage broker to help identify the options available and receive a recommendation on the most suitable solution based on their circumstances. If you would like to make a confidential no obligation enquiry, call Caboodle Finance of Sutton Coldfield, Birmingham today on 0121 308 9114 or alternatively, just click HERE to contact us via our website and one of the friendly experts will call you back as soon as possible.

Finally, we would like to take this opportunity to wish everybody a happy Christmas and a prosperous New Year.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

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. For secured loans a broker fee up to 10% of the loan amount borrowed may be payable on successful completion. 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.

The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

Caboodle Financial Services Ltd, registered in England 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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