
As your local Mortgage broker based in Barry and Cardiff, we want to make sure you receive the most suitable advice, based on your individual circumstances and helping you achieve your mortgage and financial aspirations.
Second charges within the Vale of Glamorgan and South Wales are increasing, especially with the costs of living rises this is something that will be on the rise in the next 12 months. Its believed that within the UK since last year its increase by 45%. Here I will explain what a second charge is and why you may potentially choose this as an option, instead of your existing mortgage lender.
What is a second charge?
A second charge mortgage, also known as a 'secured loan' or 'second mortgage' which allows you to borrow money, whilst leaving your existing mortgage in place.
A second charge mortgage requires you to provide your home as security.
Why would you choose a second charge mortgage:
Following recent rises in interest rates, you may have recently tied yourself in a competitive fixed rate, which now has penalties if you were to leave your deal.
Lenders affordability and wider criteria assessment may prevent you from having access to a further advance with your existing mortgage lender, and debt to income ratio and lending purpose is often restricted.
Given the rise in living costs, now may be the time to consider consolidating your debts to reduce your monthly debt outgoings or you may now be considering finance for a home improvement loan or if you are a property landlord taking out finance to make their rental properties more energy efficient.
There also continues to be a growing need for parents/grandparents to capital raise to gift for their children’s/grandchildren’s first home deposit, and demand for utilising equity in customers own residence to buy investment property.
Wonder how it works or if anyone has been successful, here is a great case study showing the advantage for this particular client and how important it was to take this second charge mortgage out.
Second Charge Case Study
We have recently helped a client who was originally looking to remortgage their existing property with their current mortgage provider, they were also keen to release equity from their property to repay some debt balances that they currently have. Due to the applicant’s income changing and impacting their ability to lend with their existing mortgage lender, they were not able to get any additional borrowing with their first charge lender.
The client had completed some work to the property and using these debts, so ideally, they wanted to free up some disposable income monthly knowing the property value had increased. The debts altogether monthly, they were paying £1401 per month, on top of their existing mortgage monthly payment. The option of a second charged was discussed and the client’s ability to lend the amount was agreed, with the new monthly payment being £369 per month!!!
Yes, there are implications of having the debt over a longer period, meaning more interest but how phenomenal is this for savings? When you think there is no option, THINK OUTSIDE THE BOX!!!! Can we help you achieve your mortgage aspirations? There are always options available.
*Your home may be repossessed if you do not keep up with monthly repayments. Think carefully before securing other debts against your home*
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