Today: Last Update:


Do you expect to see less or more second charge mortgage lenders in 2018?

A sea of change for secured lending

By  |

A sea of change for secured lending


In the past, many mortgage intermediaries have been reluctant to get involved with secured loan or second charge applications. While it could be said that this is still the case in today’s market, things are beginning to change.


A remortgage has long been viewed as providing a relatively cheap way of raising finance – after all, the rates obtainable are lower than those on secured finance. However, according to Tony Salentino, Director of Complete Mortgage and Loan Services Ltd., there are times where it is not advisable to remortgage in pursuit of capital raising.


He explains: “There are many occasions when a second charge or secured loan provides a more appropriate funding solution to a remortgage. The most obvious example is where a borrower has a large redemption penalty on their existing mortgage.


“Early redemption penalties take various forms and, of course, you’ll find different terms and conditions depending on which lender you go to. However, some fixed rate mortgages carry penalties of up to 7 per cent of the outstanding mortgage balance if redeemed within the fixed rate period, and some still carry an overhang penalty after the tie in penalty comes to an end.”


When considering the options for borrowers, the overall cost of the loan is an important consideration. The APR is a tool that can be used when comparing different products as it will take into account associated fees and charges, which might include valuation and administration fees, lender arrangement fees, legal fees, and in many cases, broker fees, discharge fees, title insurance and telegraphic transfer fees. These can often amount to thousands of pounds and should not be ignored. Secured loans, on the other hand, will carry very few of these fees outlined and will usually only be subject to the lender’s arrangement fee and a broker fee.


In order to assess the most advantageous financial solution, the total cost of borrowing must be compared between both options, with each case assessed on its own merits, according to Gary Bailey, a director at Blemain Group.


He says: “Many borrowers are benefiting from low rate tracker products which are not so readily available in today’s market. A secured loan means the borrower can keep these low rates and pay the higher rates on just the additional secured loan borrowing.


“For borrowers with a blemished credit record, the chances are that raising additional finance through a remortgage would mean paying a higher interest rate on the entire amount of their borrowings, if their original mortgage was taken out before running into credit problems, By using a secured loan, they can still benefit from the prime rate of interest on their mortgage whilst only being charged a higher non-conforming rate on the new secured loan.”


While the overall cost of borrowing is a major consideration, other factors should also be considered. Salentino says: “Speed is an important factor that is often overlooked when assessing the remortgage versus secured loan comparison.


“Typically, secured loans can complete in around 21 days. When a client needs to obtain additional finance quickly, then the usual concerns that govern suitability need to be tempered by the time frame in which the client needs their funds. Provided they are aware of the facts, then if speed is the primary issue, a secured loan will win every time over remortgage or further advance.”

The broker market is recognising the need to provide an innovative range of secured loans to a customer base that has been bruised and battered by the housing crash.  And with financial secretary, Mark Hoban, announcing the transfer of the regulation of new and existing second charge residential mortgages from the OFT to the FSA, lenders and borrowers alike will benefit from a simplified regulatory environment that will enable easier comparison between the options.

However, it is only the truly innovative lenders that these brokers will add to their panels. Bailey concludes: “While remortgages and other traditional funding sources remain difficult to access, it will be up to brokers and lenders to adapt to this sea change in the market and create a sustainable and flexible secured loans market for borrowers.”

I well omega replica watches removed them, in I below. Those companions call fake rolex watches sounded like a bird chirp. Squeezed between the fragmentation omega replica of the basalt is cold crunching sound rolex replica watches of quicksand. Flat slopes gradually, I came to the edge of breitling replica watches the crater, a cement embankment covered with dark brown on top. I ran over to cartier replica watches see the cement, the steel roof covering the top: This is the beginning of replica watches the 22 century dome structure. It would appear that we have longines replica watches come to the right place. From my u boat replica watches current position.