Friday, October 25th, 2019
Despite the fact that for a number of years second charge mortgages have now been under the same regulatory framework as mortgages, many advisers still regard the use of the former as an option that they will only explore if a remortgage or further advance from the existing mortgage provider is not possible.
Whilst second charge mortgages may not always be the final recommendation, by effectively treating second charge mortgages as if they were still “pre-regulation”, some brokers may fail to present what could be an important option for any client looking to raise capital.
There are many scenarios where one solution will more suitable than another, but there are several factors to be taken into consideration aside from just mathematics and number crunching. In short, it is crucial that whichever solution is ultimately recommended, it must align with the specific requirements of the customer given their individual circumstances.
As each customer scenario will be very different, one of the ways it is possible to guarantee that the “most suitable outcome” is achieved is to use a specialist broker like Caboodle Finance who will be able to give consideration to and advise on the merits and pitfalls of both mortgages and second charge mortgages. Whilst basic online calculators are available, what they will often not be able to do is to assess all the other crucial details that can often represent the difference between a successful and an unsuccessful mortgage application.
In our experience, the most frequent areas for which a second charge mortgage could be recommended as a means of capital raising, rather than a remortgage are:
• Where the main mortgage is on an interest-only mortgage and the client does not wish to convert it to a capital repayment mortgage via a full remortgage
• Where the main mortgage is on a fixed rate and there are significant early repayment penalties if the mortgage was moved away from the existing lender via a remortgage
• In circumstances where the client has collected some adverse credit since taking out the original mortgage, which could significantly increase the rate on the total borrowing if a remortgage was arranged
• Where the main purpose is for debt consolidation, which many mainstream mortgage lenders will not allow and others that do can often restrict what they will offer
In all the above scenarios and subject to various checks regarding credit history and affordability, any existing mortgage can remain in place and a separate second charge mortgage will be added to it.
Our team here at Caboodle Finance of Sutton Coldfield, Birmingham always do their utmost to ensure that clients get access to the very best mortgages and second charge mortgages that match their individual circumstances. With that in mind, please call us today on 0121 308 9114 or just click HERE to contact us by email and one of our mortgage broking experts will help guide you through every aspect of your proposal.
We look forward to hearing from you.
Caboodle Financial Services Ltd
240B Lichfield Road
Sutton Coldfield B74 2UD
Telephone: 0121 308 9114