A combination of record low rates in the second charge markets and the sectors strongest growth since 2011 highlights the benefits for customers and opportunities for brokers.
Customers who would potentially benefit include interest only borrowers , people who face early repayment charges, and people benefiting from lifetime trackers or low fixed rate mortgages who would lose deals by remortgaging as well as those who may want more flexible terms for their further borrowing.
Landlords could also be in line to benefit from increased competition in the buy to let second charge market, leading to significant pricing reductions, making second charge lending an attractive alternative to remortgaging, allowing landlords to benefit from the increased equity within their current portfolio.
The second charge market which lent over £750 million last year, has achieved year on year growth since 2011 against a background of a subdued remortgage market.
Rates have dropped to all- time lows above base rates making the case for borrowers to take out a second charge without disturbing their existing mortgage arrangements.
However despite new MCD rules some mortgage brokers are still not offering secured charges to their clients and they should be urged to consider the benefits of second charge loans.
Interest only customers, those benefiting from life time trackers and low fixed rate deals or those who do not want to incur substantial early repayment charges by remortgaging, including landlords who wish to release trapped equity, could all stand to benefit from second charge finance.
The afore mentioned MCD rules where alignment of regulation of first and second charge markets has delivered huge opportunities to the market allowing advisers to prove better customer outcomes.
Intermediaries should if not already doing so seriously consider including second charges within their scope of services.
For more help and advice please do not hesitate to contact me.
Ian Chambers @HoskinHomeLoans