A complete guide to second charge loans
Below is the complete guide to secured loans (also commonly referred to as second charge mortgages) for those who may struggle to find finance, or who are just looking for advice on the best deal to suit their situation.
The UK Secured lending market is advancing massively, and is often a great option for many borrowers looking to raise extra funds, especially those who don’t want to or are not able to refinance their main mortgage. We work with numerous experts in the field who are helping customers get the money they’ve been unable to find elsewhere on a daily basis – make an enquiry or read on to see what’s possible.
Definition of secured loans:
Secured loans, also referred to as ‘secured home loans’, ‘home-owner loans’ and ‘second charges’, are funds lent to a borrower who in exchange allows the lender the right to repossess the property if the loan isn’t repaid. In much the same way as a mainstream mortgage, the ‘secured’ element refers to this legal charge over the property, and basically mitigates some of the risk to the lender of not getting their money back if the borrower stops making payments, as in theory they can sell the property to recoup their money.
How do secured loans work?
Secured loans are typically lent on top of a main mortgage (which is the 1st legal charge on the property), and is why they’re often referred to as 2nd charges. The order here is important as it dictates how the equity in the property is divided if repossessed and sold. If sold for £100k, and the main mortgage is for £70k, this is settled before any further charges. The second charge lender then has the remaining £30k to settle their loan, so if they had lent £50k they’d still be owed £20k. At this point the borrower would still be required to pay the remaining cash and arrangements can be made to ensure this commitment is still met – however, borrowers who are repossessed without sufficient equity in the property to repay all debts aren’t always in a position to do so, and many enter into IVA’s or declare bankruptcy.
Getting a secured loan Online
Many of our customers visit us looking for secured loans online, and are now able to search through various secured loan lenders on-site before making an enquiry. Applying for one of these will pass you straight through to one of the specialists we work with who will get things processed ASAP.
Apart from being a viable alternative to remortgaging for many borrowers in general, there are many reasons people benefit from taking secured home loans, especially if their circumstances are out of the norm in terms of credit history, income, and loan purpose
When you don’t want to / can’t change your mortgage
When your mortgage rate is too good to lose!
With rates being as low as they have ever been, some mortgage borrowers have found themselves on unbelievable interest rates, and we have come across those who have as low as 0.25% above the base rate and below, meaning interest rates are 0.75%. Of course to anyone looking for more money it would make little sense switching the entire mortgage over to a new lender at 3%, depending on the current level of borrowing and the additional amount required.
It’s all about maths.
If the current mortgage was as low as 0.75% but you only owed £10k and you were looking for £100k, a secured loan may be 5% where a main mortgage is 2%. In this instance although the £10k already owed is on a better rate, it’s cheaper overall to switch the whole lot onto a 2% deal. If you owed £100k on 0.75% and only wanted an additional £10k, then a secured loan would make more sense.
There are also scenarios whereby it isn’t appropriate to refinance your current mortgage due to the cost in paying Early Repayment Charges (ERC’s) if you are tied into a deal – often these can be costly (anywhere from 1-5% of the loan repaid) and need factoring into any decision to refinance.
If you’re unsure of the costs and want an accurate comparison, ask your advisor to work them out – they should be doing this for you anyway!
When you want / have to keep your interest only mortgage
For the last few years interest only mortgages have been far more difficult to obtain due to the FCA tightening lending restrictions, making it mandatory for borrowers to evidence viable repayment strategies and limiting loan to value ratios to 75% (typically). Although the change was long overdue and beneficial in advancing the regulation of the market to protect new borrowers, many of those holding existing interest-only mortgages found themselves trapped into a deal and actually unable to find alternative products elsewhere, even if they wanted to. Many others with interest only mortgages are happy with their current deals and have no interest in refinancing, but would like to raise funds on their property.
Both types of borrower may well still be considered for secured loans, where the exiting mortgage is left completely untouched and a new loan is secured on top.
When you want to borrow for Home improvements
Home improvement loans are pretty much what they say on the tin in that they are loans used for home improvement, however most of the time they are the same as any other secured loan whatever the purpose, not some special unique product like many companies market for. The benefit of borrowing for home improvement is that almost every secured loan lender is happy to lend for that purpose – so you’ll have access to the whole market. This is different to those borrowing for more unique reason such as investing into a business, where only a few lenders will consider an application – limiting the number of lenders you’re eligible with and thus reducing the likelihood of getting the best rates.
Anyone looking to borrow money to improve a property would be well advised to consider secured loans over a main remortgage for several reasons:
- Rates: Secured loan rates can be as competitive as mainstream mortgages these days
- Speed: Secured loans can complete far quicker than main remortgages
- Flexibility: Many secured loans have no early settlement penalties
- Existing mortgage: Those on great deals can keep their existing mortgage
- Future refinance: Those significantly increasing the value of their property will be able to refinance later down the line with a better loan to value ratio, and are thus potentially able to get better mortgage and secured loan deals.
When you want to borrow for Debt consolidation
One of the most common enquiries people make for secured loans, as well as home improvement, is borrowing to pay off debts.
Borrowing for debt consolidation is done in much the same way as home improvements, and most secured lenders are happy to lend, however many of them will limit the loan to value ratio with more scrutiny as lending to someone who has shown a propensity to accrue unsecured debt is often deemed higher risk. Where lenders may consider secured loans up to 95% Loan to value for home improvements, they may limit lending to 85-90% for debt consolidation.
Those needing a high level of consolidation would be well advised to compare a main full remortgage to pay off debts against the secured loan option, to ensure they are getting the best deal – most good advisors will do this on your behalf, and when the regulation changes in 2016 it will be mandatory for brokers to offer this comparison and evidence you are getting the absolute best deal possible.
Irrespective of whether you use a full remortgage or a secured loan, the savings made when refinancing your home to pay off debt can be incredible, as illustrated in this example below (this was a real customer example):
Mrs Smith came to Online mortgage advisor with 52k of unsecured debt on credit cards and loans, each on different payment terms and rates of interest varying from 5-35%. She could only afford to make minimum payments on many of the cards, the balances of which would take decades to repay. Her monthly payments were the best part of £1000pm on top of her current £80k mortgage of £450pm, and she was starting to struggle to make payments on time.
We referred her on to one of the debt consolidation specialists who handles applications with late payments on a daily basis, who was able to show her the option of a main remortgage and a secured loan. With the new borrowing in place her loan to value would be 75%, giving her access to some decent rates despite the recent adverse payment history, and the advisor was able to secure a full remortgage @ 3.5% or a secured loan @ 6.7%. Factoring in fees and interest the full remortgage was most cost effective and Mrs Smith was able to settle all debts onto a repayment mortgage for £135k over 20 years, and her monthly payments reduced to £785 – freeing up over £650 per month of disposable income and making her situation much more manageable.
Of course, borrowers are advised to consider the implications of securing debts against the home, as defaulting can result in repossession, whereas defaulting on unsecured credit would not. Securing payments over a longer term like 20 years in Mrs Smith’s case, the overall interest for some of the debt may be higher despite a lower rate – and it is important to remember not every scenario results in such a big saving as this example. Make sure you and your advisor do the maths before agreeing to any deal!
When you have severe adverse credit
Secured loans are often the last option to someone looking to refinance where a main mortgage wasn’t available to them. Refinancing when you have bad credit is often tricky, as many lenders for both mortgages and secured loans will restrict borrowers in terms of loan to value, as well as rate and even if they will consider to lend at all – the lenders offering the best market rates will almost always demand that eligible borrowers have clean credit files, which means that comparison tables are not reflective of the rates you’ll be eligible for.
So, how do you know who is going to offer you the best deal?
Good question. Basically, you don’t, at least not in the current market. It really depends on what is showing on your credit file exactly in terms of issue type, how recent it was, how far behind the account was, what type of account it was for, how many issues there are, your overall credit score etc. etc. Every lender has their own scoring system and their own pass rates (which change frequently), so knowing which lenders and products you’ll be eligible for on any given day without actually approaching them formally, is impossible. The only way of ensuring you have the best chance of getting the best deal is to use a broker who works in the market everyday – someone who knows the criteria of the lenders and can review your credit file to match you with the most likely to approve at the best rates.
It is possible to refinance with adverse credit in the following scenarios:
- Secured loan refinance with late payments
- Secured loan refinance with defaults
- Secured loan refinance with CCJs
- Secured loan refinance with mortgage arrears
- Secured loan refinance with a debt management plan
- Secured loan refinance after bankruptcy
- Secured loan refinance with an IVA
Secured loans may be better for those with more severe adverse credit issues, as these lenders are more able to price loans according to risk and tend to be slightly more flexible in terms of what they will and wont accept. Where it may be impossible to borrow on a main mortgage if you are currently 3 months behind on your mortgage, there are secured loan lenders who will consider it. If you have been made bankrupt but have equity to settle the debt and annul the bankruptcy from record, mainstream mortgage lenders aren’t willing to consider applications at all, where as one or two secured loan lenders can consider it.
How severe can your credit history be?
This table outlines the criteria of many of the adverse credit secured loan lenders. As you’ll see they can be flexible in various avenues, and will at times offer lending at high loan to values (LTV) despite certain adverse credit issues.
There are often instances where lenders will be able to consider cases that sit outside of these guidelines – This table acts only as a rough guide to help readers understand the criteria of the more specialist adverse credit secured loan lenders, and to help raise awareness of what is possible.
|Credit issue||Worst cases considered|
|Late payments||Multiple accounts currently in arrears. You can be up to 6 months behind and still be considered up to 85% LTV.|
|Defaults & CCJs||Multiple Defaults registered in the last 12 months. LTV may be restricted for those who have multiple large defaults (for instance those with smaller defaults under £500 may still be eligible up to 85% LTV).|
|Mortgage Arrears||Anyone who is currently up to 3 months behind on their mortgage can be eligible up to 75% LTV, perhaps higher, and those who are further behind may still be eligible but up to a lower LTV of around 65%.|
|Debt management||If you’re currently in DMP you may be eligible up to 85%, depending on how your credit reports looks – if you have multiple recent defaults as well, then you may be restricted to a lower LTV. This is the same for those who have recently repaid or had a historic DMP.|
|IVA||Those Currently in an IVA can also be considered up to 85% LTV depending on your payment conduct and any other credit history issues showing on your credit file. In a similar way to DMP’s if issues are showing and are recent then the LTV may be restricted.|
|Bankruptcy||Because of the rules and restrictions a bankruptcy places on an individual, to borrow anything you will need to be formally discharged. Once discharged, the maximum LTV you can borrow to will depend on how recent the bankruptcy was – those discharged for longer are more likely to be approved for a higher LTV product than those who were discharged recently.|
|Repossession||Of course, if you’ve been repossessed then there won’t be a property to secure a loan on! However if you have had a historical repossession and now own a new property you wish to refinance, this is certainly possible depending on when the repossession was and your credit conduct since.If you are currently facing repossession as you are way behind on mortgage, read this section ***ADD LINK***|
NOTE: Of course the rate you are offered will be dictated by how severe and recent your credit issues are – those with one or two older small issues will likely get a far better rate than those who have major issues more recently.
Please bear in mind that the info in this section is not tailored to every individual and as such is not an accurate representation of whether you will be approved or declined for a secured loan. Other factors of course come in to play such as income and affordability, but also with adverse credit history it’s important to remember the lenders will look at the entire proposition – if you have mortgage arrears and a bankruptcy, it may be that you are declined despite meeting the above criteria for them both, as combined it may be deemed too great a risk to lend.
The only real way to establish if you are eligible and at what rate is to make an enquiry, and one of the secured loan specialists will go through your credit reports and your situation to match you with the best lenders from the start.
Secured loan refinance to get up to date
If you are currently behind on your payments for any type of account it may be possible to pay off your arrears with a secured loan to get up to date. In general, if you are behind on unsecured borrowing (loans / credit cards / utilities / overdrafts etc.) it may well be possible to refinance with several lenders up to a higher loan to value, and at decent rates. This depends mostly on the number of arrears you are behind, the amount you owe, and any other adverse credit history on you credit file, as well as the standard criteria lenders demand such meeting affordability requirements.
Secured loan refinance to avoid repossession
If however you want to refinance to settle mortgage arrears or payments on another secured loan, then lenders are more restrictive – as you can see form the table above if you want to refinance to repay mortgage arrears, most lenders will lend up to 75% to borrowers who are currently one or two payments behind, whereas anyone 3+ payments behind will only likely achieve up to 65% loan to value. Anyone who is behind by more than this may struggle to borrow anything until they are up to date, but of course this is case-by-case and the specialists can review every application – often because of the high volume of specialist business they do, they have excellent relationships with lenders who are willing to consider even the most severe of cases, if presented in the right way.
Refinancing with a secured loan to repay mortgage arrears is a common enquiry we receive, and helping customers struggling is what the specialists we work with love to do – often they are able to help people falling further behind with payments to refinance to avoid repossession.
When your income isn’t straightforward
Rules around verifying income for secured loans has changed recently, and will continue to do so as the new FCA regulation takes effect in 2016, where lenders would once be allowed to verify a borrowers income from credits and turnover into a bank account, and will now required to assess pay slips / self-employed accounts for the most part. There are a very small number of lenders who will still consider bank statements alone to prove income, however rates are higher than the borrower may be able to obtain elsewhere and there needs to be a viable reason as to why the customer cannot produce other income evidence.
Not every customer with unique income has trouble proving it however, and yet many mainstream 1st charge mortgage lenders will still decline applications. Valid applications for customers with unique income who may find it easier to obtain a secured loan rather than a main mortgage are:
- Borrowers who are paid in cash
- Those employed for a family business
- Self-employed under 12 months
- Income coming from overseas
- Investment income
- Employed abroad
- Paid in foreign currency, and more.
If you have unique income and are struggling to refinance or borrow more money on a main mortgage, there may well be a secured loan lender out there for you – make an enquiry and the specialist will establish the best option for you.
When you want to borrow more than main mortgage lenders allow
“How much can I borrow on a secured loan?”
Changing affordability rules over the last several years have left many borrowers unable to remortgage their existing deals to borrow additional money, as many lenders now cap borrowing to 5x income or less. To those of you looking for additional borrowing on your property for whatever reason, in general secured loan lenders will offer the most generous terms when it comes to affordability. They generally base lending decisions on income and expenditure, and don’t cap borrowing based on income multiples like most main mortgage lenders, meaning that its often possible to borrow well over 5x income – there have been customers who have borrowed 10x and beyond in the right circumstances.
For example, if a couple with a joint income of £50k needed to borrow £200k on top of their £100k mortgage, this would almost certainly be impossible on a main residential remortgage, but would be quite plausible with a secured loan.
“What is the biggest secured loan I can get?”
As mentioned above, it is possible to borrow well over 10x income in the right circumstances, but there are no set rules or criteria we can offer here to help calculate the maximum loan size for you. When it comes to maximum borrowing, all affordability assessments are done differently by every lender, and generally on a case-by-case basis. It depends on the amount and type of your income, the value, location and build of the property, your credit history, credit score, age and numerous other factors.
If you want to know where your limits are then make an enquiry and one of the specialists will establish the best option for you.
When you are borrowing short term
Secured loans are generally much more flexible than main residential mortgages, and as such can be more suitable to those who are perhaps planning on repaying the loan early, selling the property or refinancing in the shorter term. Most residential mortgages have a 2-year tie in period (although there are certainly products out there without tie-ins), whereas most secured loans have only a few months of interest as a penalty to repay. This may favor those looking to only borrow over the shorter term.
When you need to borrow for unique reasons
This is a big area for secured loan lending, as many main 1st charge mortgage lenders will restrict borrowers on the use of additional funds raised, namely to home improvements, debt consolidation, purchase of property etc. Anyone looking to something out of the ordinary is likely to struggle with most main mortgage lenders, whereas many secured loan lenders are more than happy to consider lending for any purpose (so long as it’s legal!), for instance it’s possible to obtain:
- A secured loan to build your own home,
- A secured loan to buy a holiday home,
- A secured loan for an investment,
- A secured loan to inject cash into a business,
- A secured loan to fund a brand new business,
- A secured loan to give a gift to family,
- A secured loan to gift money to charity,
- A secured loan to buy a classic car,
- A secured loan to fund a music career,
- A secured loan to buy a rare animal etc. etc.
When you want to refinance a non-standard construction property
Refinancing residential properties of non-standard construction can be just as tricky as finding a main mortgage lender for them when you purchase in the first place. That said, there are a handful of lenders who specialise in lending on almost any type of property, but typically limit lending to 75% loan to value (LTV). They will consider:
- secured loans on a farmhouse
- secured loans on uninhabitable properties
- secured loans on properties that need renovating
- secured loans on land
- secured loans on concrete properties
- secured loans on timber framed properties
- secured loans on thatched roof houses
- secured loans on flats
- secured loans on prefabricated steel properties
- secured loans on flats above a shop
- secured loans on listed buildings
- secured loans on properties with solar panels
If you own a commercial property such as a shop or HMO, click here.
Secured debt, although often the most cost effective way to borrow, still has certain considerations to bear in mind. Namely:
- Property risk: Securing debt on your home may lead to repossession should you not maintain your payments, whereas unsecured debt doesn’t put your property at risk.
- Borrowing term: Many borrowers arrange secured finance over their mortgage term, or if not, longer terms than unsecured debt. For instance, for a secured bank loan of £20k the rate may be much more attractive than an unsecured bank loan, however stretching cheaper borrowing over 25 years may well mean the total cost is higher than more expensive borrowing over 5 years.
- Payment flexibility: There are flexible products out there, but generally secured borrowing often comes with repayment penalties if you overpay or refinance within an initial tie in period.
REMEMBER | The higher the risk the higher the rate.
The exact rate you’ll be offered depends on your situation. Those with clean credit borrowing an amount that’s easily affordable at a low loan to value (LTV) will be deemed lower risk and thus likely qualify for the best rates out there. Those with heavy recent adverse credit issues looking to borrow to a higher LTV will likely be offered a higher rate.
To establish the exact costs and if happy, to make an application make an enquiry and one of the secured loan specialists will run through the figures for you.
If you want to refinance a buy to let (BTL) property using a secured loan, this is certainly possible. The arrangement works in much the same way as securing loans on residential properties, however the manner in which these applications are assessed by lenders, and in fact, which lenders offer these products, can differ dramatically. The following shows you the differences between securing loans on residential property and BTL property.
Maximum loan to value (LTV)
Typically the maximum LTV you can get on a BTL property is 75%, however there are a small number of lenders considering higher than this for the right customers.
Loan repayment type (interest only / Repayment)
It is actually possible to borrow on an interest only basis with a secured loan if you are securing against a BTL property, which is different to residential property where most lenders require the loans to be setup on a repayment basis.
Residential applications are based on the borrowers income and personal ability to service the loan and meet payments. Generally for BTL property, lenders use the property’s rental income to establish affordability – if the rental income is enough to cover the cost of any existing mortgage and the repayments on the new loan, then it can be deemed affordable. It is also possible to borrow additional funds over and above the affordability of the rental income (if the equity is available), by offsetting any shortfall with employed or self-employed income of the applicants – something that many mainstream 1st charge lenders won’t do.
If the rental income on a property is £1,000pm and the current mortgage is £350pm, then the new loan can cost up to £650pm and still be affordable. If the customer needs to borrow more than this and has disposable income of £200pm then the total loan can potentially cost up to £850pm and still be deemed affordable. The total amount available will then depend on the interest rate, repayment type, and term.
Some buy to let secured loan lenders (in the same way as many 1st charge mortgage lenders) require rental income to cover the payments by a certain % above the normal monthly payment, say 125% for instance. This would mean that for a loan costing £500pm to be affordable, the rental income must be £625pm. There are some however, that deem it affordable if the rental income covers the repayments 100%, so £500pm.
Being self-employed can make things tricky to obtain credit in general, as many lenders have different requirements for borrowers to evidence their income, as well as having strict limitations on the type of business you run, the length of time you have been trading, how the accounts look etc. etc. Getting a secured loan when you’re self-employed is no different, however there are lenders out there that are more flexible than others, able to consider unique business types and those trading for a relatively short time.
What evidence of income do secured lenders ask for?
In years past and until very recently, many lenders would also allow applicants to use just bank statements to verify their self-employed income without the need to product tax returns or business accounts – this was great for those who declared business losses, or were able to write off higher expenses to reduce tax and still borrow based on the business turnover. Many of these lenders have now changed their policy and demand more evidence of income to fall into line with FCA regulations, however there are still one or two lenders considering income verified from bank statements alone.
If you are asked to prove income you will likely be asked to show your last 3 months business bank accounts, along with your latest years business accounts and / or self-assessment tax returns (SA302 certificate), and some lenders will require up to 3 years worth of business accounts or SA302’s.
How do they calculate self-employed affordability for secured loans?
This depends on whether you are a sole-trader, partnership, or limited company director. Usually, lenders will consider the following:
|Trading style||Income used|
|Sole trader||Net profit figure (shown as ‘total income received’ on SA302).|
|Partnership||Your share of the Net profit figure.|
|Ltd Company Director||Your Salary + Dividends drawn (however some lenders will consider your share of net profit if you have left revenue in the business).|
Based on these figures, the lenders will then calculate affordability in their usual way, assessing your income against your expenditure to establish the most you can afford to borrow.
|Max LTV available||Credit history|
|120% +||Any accepted (even severe adverse, using specialist non-equity lenders)|
|90%||Light adverse considered|
|85%||Moderate adverse considered|
|75% LTV||Heavy adverse considered|
This really depends on your credit history and the type of finance you’re looking for, as covered above, many lenders place restrictions on loan to value depending on the risk. Typically, clean credit borrowers who can afford to, will be able to borrow up to 95% on conventional secured loans at very competitive rates, whereas those with adverse credit are likely to need more deposit.
This is with the exception of those looking to borrow between 5-20k, who can actually borrow well over 100% LTV on non-equity loans – rates here are of course much higher than for mainstream secured loans and depending on your credit history can be anywhere from 10-50% interest! Read more on borrowing without any equity in your home below…
Borrow on your home without equity
If you have no equity in your property but want to raise cash for something, you may still be able to finance things with a specialist ‘non-equity loan’.
These loans are registered as equitable charges against the property in the same way as a secured loan, but don’t necessarily require there to be any equity in the property at all. For instance, if you have a £100k mortgage on a property worth £90k, you are already in negative equity by £10k and no main residential mortgage lender or secured loan lender would consider your application at all, but a non-equity loan lender would, and up to the full £20k if affordable.
Yes – you have read that right… These lenders will consider lending to anyone who is a homeowner regardless of the amount of equity in their home, even if you’re in negative equity!!
These loans aren’t cheap, but they exist. The very nature of secured loans are that there is some sort of asset on which the loan is secured, so if the borrower doesn’t pay the lender can repossess the asset to sell and it to recoup their money. So, if you don’t actually have any equity in your property the chance of a second charge lender being able to make their money back is slim-to-none. This is why the rates are far higher on these types of loan.
Non-equity loan FAQ:
What is the maximum loan to value?
There isn’t one! Technically you could borrow over 150% of the property value.
How much can you borrow?
Loans are from £5,000 up to £20,000
What adverse credit is accepted?
Pretty much any adverse credit history is considered, however recent and however severe. Lenders accept late payments, mortgage arrears, defaults, CCJs, debt management plans, IVAs, Bankruptcy (must be settled) – pretty much anything!
What are the rates and fees?
Depending on your situation, how adverse your credit history is and how risky the lender deems your proposition, you can expect to pay anywhere from 10-60%+, so be prepared for higher interest rates if you’ve had credit issues in the past! Depending on the lender, there are usually application fee’s associated with the loans as well, the details of which your advisor will fully explain before you proceed.
What proof of income is required?
These lenders tend to be more flexible that mainstream secured loan lenders, and can consider evidence of income from the latest pay slip or self-employed annual accounts, and will assess affordability using your latest months bank statement to establish your income against your regular outgoings.
What is the application process?
Once you make an enquiry we will refer you to the specialists, who will then complete the necessary fact find and information gathering, research the market and recommend the best deal for you. Then when you are happy to proceed they will collect the relevant documents and signatures etc. and submit your application to the lender. These lenders have different processes to many of the main secured loan and 1st charge mortgage lenders, and many don’t even come to value the property – they will simply check info available online from sources like Zoopla and Mouseprice to ensure the property exists and your estimate of the value is in line with the local areas etc. If the property is suitable and the lender is happy with the application, the solicitors (which they usually pay for) draw up the paperwork and then they release the funds to you.
Can I get a non-equity loan on a buy to let property?
Yes – the policy of these lenders is tighter when it comes to affordability, and rates may be slightly higher, but it is certainly possible.
There are loads of secured loan lenders available, which you’re eligible with is another matter and depends entirely on your situation – Loan to value, loan amount required, loan purpose, the location of your property, the property type, your age, income, credit history, credit score with the lender etc. The right lender for you is almost certainly not going to be the right lender for someone else.
To browse through some of the lenders and deals, use the secured loan rates tables here, to establish the best deal for you please make an enquiry and one of the experts will be in touch.
Make a secured loan enquiry
Make an enquiry using the form below. If you want to ask a simpler, more direct or very specific question please give us a call on 0800 304 7880 or click the enquiry button below.
Recent news: Market changes on second charges in the run up to FCA regulation in 2016
The secured loans market has gone through seismic change over the last few years, and as with main 1st charge mortgage lenders, since 2009 more and more 2nd charge lenders have returned and we have seen criteria relax across the board, as loans for those with heavier adverse credit issues and higher loan to value ratios become more and more common.
With regulation coming in 2016 to bring secured loans under FCA jurisdiction, this change will only continue as lenders, packagers, and brokers adapt their criteria and their processes accordingly – whether this is viewed as a positive or negative depends on who you ask, but in general these changes are long overdue and a positive move by the FCA, making the lending markets much more competitive. A shining example of this will be the mandatory requirement for all advisors to offer anyone raising money against their home the comparison between a full remortgage and a secured loan, where in the past, intermediaries were not obliged to consider secured loans at all.
What this means for borrowers:
When the changes are brought in officially, every borrower will be given more choice, as intermediaries must make sure they offer the absolute best deal available regardless of the type of product. This will be particularly beneficial for those with fantastic mortgage deals they’d prefer not to refinance, as they have to be offered the most competitive 2nd charge options, whereas pre-regulation this is not a mandatory consideration.
However, the extent to which the new changes will impact how 2nd charge lenders decide who they lend to remains to be seen, particularly in the adverse credit market where lending is still rife. Historically, and until very recently, it was possible for borrowers to achieve all manner of things with secured borrowing – especially where mortgage lenders were not willing or able to lend. This was (and is) true for borrowers with adverse credit, with secured lenders offering finance to individuals that many mainstream lenders wouldn’t touch.
Some changes can already be seen involves how lenders verify income, especially for those who are self-employed, where it was once possible to access funds using bank statements alone to evidence income it is now likely that most secured loan lenders require official accounting information – not so great for those who declare low net profits or those who have only been self-employed for a short while.
FYI – At the time of writing there are one or two lenders who can still consider borrowing on a mortgage using bank statements only, on a case-by-case referral basis.