The Number of Second Mortgage Applications Increase
There has been a big increase in the number of people applying for borrowing supported by a second mortgage in recent months. Apparently, this is partly due to the fact that from the 21st March 2016 the Financial Conduct Authority introduced more stringent regulations that lenders must go through when assessing such applications.
A second charge mortgage is taken out for a variety of purposes. For instance, it could be used to consolidate other debts such as credit cards and personal loans but at a cheaper rate of interest. There are many people that have built up a portfolio of unsecured liabilities over a number of years that struggle to meet the repayments each month. By consolidating those debts onto one loan secured against a second mortgage on your property it could result in your monthly repayments reducing significantly.
There are some people that would consider applying for a second mortgage perhaps to carry out improvements to their property but do not wish to disturb their residential first mortgages if they are on particularly low fixed rates of interest. Although the interest rate on a second mortgage is possibly going to be higher than that of the first mortgage it may be cheaper to have both types of mortgage.
As with all types of lending product it is worth shopping around to try to find the most competitive package. You will no doubt find that there are many lenders prepared to consider second mortgage lending. In doing so, it is not just the interest rates that need to be compared but also things like the impact of any fees that may be payable and whether there is the option to make lump sum reductions without being penalized for doing so.
If you are considering applying for borrowing secured by a second mortgage then you may wish to obtain some advice from an independent finance broker.