Last post: Oct 24, 2017
Second charge borrowing is booming, with more lenders offering secured loans to a diverse array of clients seeking a more convenient way to source finance. So who is making use of second charges and why are these loans on the grow?
In May 2017, the second charge mortgage sector grew by 29% in volume and 26% in value compared to May 2016. This year has seen secured loans experience a resurgence in popularity, both among lenders and borrowers.
From customers looking for an alternative to remortgaging, to the recently self-employed seeking more flexible and accessible ways to borrow, there are all sorts of consumers who are becoming freshly aware of this type of product.
Although secured loans aren't the best option for every borrower, in many cases they can prove to be a shrewd financial step. A few cases in which second charges may be a good fit include:
- If your fixed mortgage includes early repayment charges
- If you currently enjoy a low mortgage rate
- If you are using an interest-only mortgage
- If you have a poor credit rating
- If you are recently self-employed or retired
Often allowing higher loan-to-value borrowing, these products use an asset already at a client's disposal to free up credit, securing the loan against property (although other assets may also be used in some cases). Comparatively fast to arrange, this type of credit product is also highly accessible for consumers who meet lenders' criteria.
Although this type of product fell out of favour in previous decades due to growing repossession rates, new safeguards, practices and awarenesses have refreshed and reinvigorated the second charge market, leading many lenders and borrowers to feel more confident in secured loans. Over Q2 2017 the FLA reported a fall in second charge mortgage repossessions, with these cases making up just 0.06% of all outstanding loans.
Accessible, revamped and frequently very convenient, secured loans certainly appear to be undergoing a renaissance in the credit industry.
Are you interested in making use of a secured loan? Our team can provide in-depth information and help you find a perfect fit finance option for your precise circumstances. Learn more online or contact us today.
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