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15Jun/170

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Second charge mortgages are frequently called second mortgages since they have secondary priority behind your primary (or first charge) mortgage. They are a secured loan, which suggests they use the borrower’s home as security. Many individuals make use of them to raise money as an alternative to remortgaging, but there is something you ought to be mindful of before you decide to apply.

A 二胎 allows you to use any equity you might have in your home as security against another loan.

It implies you will possess two mortgages on the home.

Equity will be the percentage of your dwelling owned outright on your part, which is the value of the home minus any mortgage owed on it.

For instance, if your property is worth £250,000 and you will have £150,000 left to spend on the mortgage, you have £100,000 equity. Which means £100,000 will be the maximum sum you are able to borrow.

Lenders now have to conform to stricter UK and EU rules governing mortgage advice, affordable lending and dealing with payment difficulties.

Because of this lenders now must make a similar affordability checks and ‘stress test’ the borrower’s financial circumstances being an applicant to get a main or first charge residential mortgage.

Borrowers will must provide evidence that they could afford to repay this loan.

For additional information on affordability assessments and evidence in support of your own application, read How to obtain a mortgage loan.

Why take out a 2nd mortgage?

There are many explanations why a second charge mortgage could be worth looking at:

If you’re struggling to acquire some type of unsecured borrowing, say for example a personal loan, perhaps because you’re self-employed.

If your credit score went down since taking out your first mortgage, remortgaging could mean you end up paying more interest on the entire mortgage, as opposed to just on the extra amount you want to borrow.

Should your mortgage carries a high early repayment charge, it may be cheaper so that you can obtain a second charge mortgage rather than to remortgage.

Each time a second charge mortgage could possibly be less than remortgaging

John and Claire possess a £200,000 five year set rate mortgage with 36 months to operate before the set rate deal ends.

The need for their property has risen since they took out the mortgage.

They already have decided to set up a family and wish to borrow £25,000 to refurbish their house. If they remortgage or remove a 2nd charge mortgage?

Should they remortgage, they’ll need to pay the £10,000 penalty and there’s no guarantee that they’ll be able to get a much better rate of interest compared to the one they can be currently paying - in fact they might have to pay more.

If they obtain another charge mortgage, they may pay a higher interest in the £25,000 than they pay on the first mortgage, plus fees for arranging the second charge mortgage. However, 62dexkpky will likely be far less than make payment on £10,000 early repayment charge as well as a higher rate of interest on the 房屋二胎.

John and Claire decide to take out a secured loan that doesn’t possess any early repayment penalties beyond 3 years (when their main mortgage deal ends).

At this moment they may decide whether to see if they could remortgage both loans to have a better deal overall.

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