Recent leading industry data released by the Finance and Leasing Association has revealed that second charge lending has increased by up to 21% - signalling a stark annual growth.
These figures also revealed that there were 2,282 new agreements in November 2018 alone, proving that the market has continued to show significant volumes of growth compared to recent years.
Fiona Hoyle, head of consumer and mortgage finance at the Finance & Leasing Association, has been quoted in the media stating: “The market has reported a relatively strong performance in recent months following a steady first half of 2018.
“The second charge mortgage market is likely to report solid single-digit new business volumes growth in 2018 overall.”
What are second charge mortgages?
Second charge mortgages are a type of secured loan that uses the borrower’s home as security for funds, ranging from £10,000 upwards.
Many people choose this option to raise money instead of remortgaging or taking out a personal loan, especially if they are struggling to qualify for a personal loan, if their credit rating has deteriorated, or if their mortgage has a high early repayment charge.
This option can also help raise funds for home improvements, buy a car, pay for a wedding, investment into your business or even to help repay a tax bill. Some homeowners even use money for cosmetic surgery, university fees, or helping a family member to purchase their first property.
Why are second charge mortgages so popular?
Research has revealed that more homeowners than ever before are looking to refinance or raise urgent capital, resulting in property owners looking at alternative options to re-mortgaging their properties.
One of the reasons why second charge mortgages are so popular is that there has been increased competition between second charge mortgage lenders, making the rates more attractive.
How are second charge mortgages repaid?
Second charge mortgages are repaid alongside your first mortgage payment, and how much you can borrow depends on the existing equity in your home. Loans are also subject to affordability calculations and credit status.
On average, people tend to borrow anything between £30,000 and £80,000 however, the more equity you have available in your home, the more you will be able to borrow.
Your first mortgage will be unaffected however, you must have enough equity to cover the funds you want to borrow. As the market is growing and there is already increased competition, it’s always best to shop around for the best deal by exploring the borrower rates available.
Of course, before you decide that a second charge mortgage is the best option for your financial situation, it’s always a good idea to speak to a qualified advisor.
If you’re thinking of applying for a second charge mortgage or want to know more about them, then get in touch with CMME today.