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THE SECOND CHARGE MORTGAGE 'STATE OF THE NATION'

March 2018

Two years after MCD and regulation by the FCA, the second charge mortgage market continues to grow with business levels starting to return to similar levels seen pre-regulation.

 

Commenting on new business figures for January 2018 for the second charge mortgage market, Fiona Hoyle, Head of Consumer and Mortgage Finance at the Finance & Leasing Association (FLA), said:

 

“The second charge mortgage market reported growth in January, with new business up 8% by value and 13% by volume compared with the same period in 2017.

 

“The sector is continuing its work in ensuring that the new regulatory regime is fully implemented.”

 

The aforementioned figures certainly ring true for Brightstar with February business levels increasing from January this year and March continuing in very much the same way.  This can be attributed in part to continued product innovation from our lenders, which is in turn leading to greater acceptance of second charge mortgages for clients looking to raise capital against their home.

 

This is fantastic news for the second charge mortgage sector but I believe there are still further opportunities for second charges to become more widely recommended as part of the advice process for clients looking to raise additional capital. Many of the clients we currently help arranged their mortgage pre-credit crunch, and are therefore on low base rate tracker deals, so the financial impact of arranging a re-mortgage means that a second charge mortgage provides a far better option in meeting their immediate needs.

 

A second charge mortgage also works for many clients that have built up levels of unsecured debt that make a re-mortgage difficult based on first charge lenders current affordability criteria. Recommending a second charge mortgage will give these clients the option to clear the unsecured debts to hopefully facilitate the future opportunity for a re-mortgage and further reductions in their overall monthly costs.

 

However! It is important to note that whatever a clients needs for a second charge mortgage are, they should always be provided with appropriate advice to ensure that a second charge mortgage is suitable for their circumstances.

 

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