When considering your loan options, you’re going to come across a second charge mortgage. Not only does it have an interesting name, it is extremely easy to get one as well. As a means of generating a certain amount of cash through a secured loan, second charge mortgages are rather attractive.
Nonetheless, before you get one, you should consider the following to learn more about them and determine why you should go for one:
Understanding the Mortgage
A second charge mortgage is when you draw another mortgage on any property which is owned by you. The amount you can get and your eligibility of the loan is based on the total equity of the property instead of your credit score history.
While these are taken into account to determine the rate of re-payment and your success in paying off the loan, they don’t play as significant a role as is usually played when you’re getting a regular mortgage. This makes eligibility requirements for the loan very easy and many people have started taking second charge mortgages out as a means of funding other projects.
With the new rules and regulations in March 2016, new changes were introduced in the market for lenders, administrators and borrowers of second charge mortgages. While the rules and regulations introduced different requirements for lenders and administrators, borrowers get to enjoy more protection.
Moreover, lenders and administrators are now required to only offer loans based on solid proof that their borrowers can easily make the repayments. Moreover, they have to ensure that they keep an eye on the rate of repayment and the impact the load might have on it over the years. All in all, measures are in place to ensure that the borrower doesn’t end up biting off more than they can chew.
How is it Useful?
Second charge mortgages have turned out to be extremely useful, particularly for home owners who’re running small businesses or are even looking to raise some revenue for home renovations and other endeavours. Most of the time, it is possible to raise amounts as large as £250,000 since people usually have that much equity built up on their houses.
Moreover, anyone with bad credit can also improve their credit history with the help of a second charge mortgage. Some home owners are also opting for second charge mortgages instead of remortgaging in order to bypass the high charges of early repayment on their properties because this option is much cheaper and sustainable for them.
As a secured loan, a second charge mortgage is a better option as compared to unsecured loans. While it is comparatively popular, when applying for a second mortgage should be done with care. Failure in repayment could entail losing your property so it is always important to opt for it after some careful consideration. Moreover most lenders and administrators are more than happy to allow you some time to make a careful decision so there is no need to run head first into it. If you want to learn more about personal loans and the basic, you can read here.