Top five reasons to consider a second charge mortgage
1. Declined Remortgage
If a customer has been turned away for a remortgage or further advance, then they may still be able to secure a second charge. With rates starting from as little as 3.73% and some lenders not charging product fees or ERCs, a second charge can be a cost-effective alternative.
2. Mortgage with Expensive ERCs
For customers who are looking to borrow more money to refurbish their home, raise a deposit for a buy to let or for any other legal purpose; a second charge gives them the freedom to do so without disturbing their existing first charge mortgage. This is an important factor to consider for customers who would be subject to hefty ERCs.
3. Debt Consolidation
Most second charge lenders have tiers of products which are geared towards helping customers with a less than perfect credit history get back on track. For example, customers with CCJs, defaults, secured and unsecured arrears, IVAs and DMPs, are all catered to by second charge lenders at much lower rates than ever seen before. Plus, some lenders now completely ignore adverse over 12 months old.
4. Struggling with Affordability
If you have a client who is looking to remortgage but you’re struggling with income multiples then a second charge may be the answer. Generally, second charges allow higher income multiples and can be completed more quickly than a first charge mortgage. This may be a viable option for landlords who are struggling to raise funds to expand their portfolio or refurbish a property following the PRA changes.
5. Customers with Non-Standard Incomes
Customers who are retired, self-employed, contract workers or zero hour workers are accepted by many second charge lenders as long as they can prove that they can afford the loan. Income from second jobs, overtime, bonus, commission, benefits and other allowances are also taken into consideration by some lenders.
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