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.
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.
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.
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.
Caboodle Financial Services Ltd
Mere Green House
46-48 Mere Green Road
West Midlands B75 5BT
Telephone: 0121 308 9114