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Seconds anyone? A look at real life case studies for second charge mortgages

Posted: 5th November 2018 by d.marsden
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The second charge mortgage marketplace has come a long way in recent years with lower fixed rates and no early repayment charges. Second charge lenders like Together Money and Masthaven have been offering borrowers a lifeline where they may not have meet the requirements of many the high street lenders and banks.

Here with the help of finance broker Simon Nicholson at Lending Expert Finance Monthly looks at 3 real life examples of where a second charge has proved to be an alternative solution for introducing mortgage brokers and their clients.

Case Study 1: A Buy to Let Re - Mortgage Enquiry Which Completed In 5 Working Days

    • Problem - Our client wanted to borrow £60,000 on his unencumbered buy to let terraced property so he could carry out refurbishments to a number of his other buy to let investment properties. He had only been self-employed for just over 12 months and had no proof of income other than a copy of the assured hold tenancy agreement. He also had been recently bereaved and as a result he had some late and missed credit card payments too. He had searched the internet and could not be helped until he approached one of our directly authorised brokers who introduced the enquiry to Lending Expert.
    • Solution - After carrying out research including a soft quotation credit search the enquiry was referred to one of our buy to let lenders based upon the merits of the case. The lender approved the referral within 30 minutes for the amount requested. Lending Expert paid for the valuation fee so the client did not have to pay any upfront fees as a mortgage deed was signed which meant no conveyancing costs were incurred.
    • Outcome – The client completed within 5 working days and could now carry out his refurbishment programme immediately ensuring that he could let out a couple of his properties sooner rather than later generating extra rental income for his business.

Case Study 2: A Second Charge Mortgage Enquiry – Re Mortgage Down Valuation & A £19,500 Consolidation at 101% LTV

  • Problem - Clients wanted to borrow £ 30,000 for home improvements and to consolidate credit cards via a 90% LTV NatWest remortgage. The property was down valued by £15,000 reducing the cash out to just £10,500. Clients still wanted £19,500 for the consolidation of unsecured debts and to also make monthly repayment savings too.
  • Solution - After carrying out research including a soft quotation credit search one of our advisers referred the enquiry to one of our prime lenders based upon the merits of the case. The lender approved the referral within 60 minutes for the amount requested with the proviso that the clients make their first payment with NatWest so they could provide consent to a second charge.
  • Outcome – The clients could now carry out their home improvements with the added bonus that they would save £ 300.00 per month thereby meeting their short term financial objectives.

Case Study 3: A Second Charge Mortgage Enquiry – £26,700 Consolidation Secured Loan To Reduce Client’s Monthly Outgoings By £800 per month

  • Problem - Our customer had accumulated a significant amount of unsecured debt but despite the £1400 per month repayments, the balances were not reducing as quickly as he would have liked. A recent family bereavement required him to take out a further loan to settle an unexpected expense and that only added to his financial predicament. With the repayments severely restricting his disposable income our applicant was struggling to make ends meet, let alone enjoy life.
  • Solution - By consolidating his outstanding debt into one affordable loan he could reduce his outgoings to around £600 per month. Being keen to stabilise his future outgoings, the customer chose to take advantage of our 5 year fixed rate product.
  • Outcome – The lender was able to issue a Binding Offer within five days of receipt of the application and with an automated valuation negating the need for an in-person inspection, the case proceeded to a swift completion.

Case Study - A Second Charge Mortgage Enquiry – Remortgage Affordability Decline & a £19,000 Consolidation To Make Monthly Savings

  • Problem - The client wanted to borrow £ 19,000 to consolidate her two personal loans and a credit card via a remortgage @ 54% LTV on interest only as she would downsize in 11 years’ time. She had reduced her hours from a full time to part time staff nurse and was in receipt of an NHS pension too. Her loan and credit card commitments were costing her £542 per month and so with her reduced net income had to make monthly savings to continue her lifestyle. The broker had sourced and contacted many lenders to see if they would approve on either interest only or on capital and repayment over 11 years. She was declined by every lender that was approached upon affordability and so the only option available was to arrange a product transfer with the Halifax reducing the rate from SVR to a 2 year fixed rate which saved her £120 per month and applying for a second charge mortgage to consolidate her loans and credit cards.
  • Solution - After carrying out research including a soft quotation credit search one of our advisers referred the enquiry to one of our prime lenders based upon the merits of the case. The lender approved the referral within 90 minutes for the amount requested.
  • Outcome – The client saved £ 278.00 per month from the second charge mortgage and £ 400.00 per month overall thereby meeting her short term financial objectives.

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