An equitable charge can be a fast and flexible way for homeowners to secure a loan against their property and we now have access to a product that we think is the Swiss Army Knife of second charge lending.
An increasing number of second charge lenders are registering their charge as an equitable charge, rather than by a second legal charge. An equitable charge is where a lender does not take a legal stake in the property but instead is given the right for a judicial process of recovery and this means an equitable charge can be used where the first charge lender would usually decline its consent to a second charge being registered.
We have recently been given access to product that registers an equitable charge that has so many potential uses, we think it could be the ‘Swiss Army Knife’ of second charge lending.
The product is available up to 125% LTV on loans up to £25,000, up to 100% LTV on loans between £25,001 and £35,000 and up to 95% LTV on loans between £35,001 and £50,000.
It can be used by borrowers with a Help to Buy loan and works well for first-time buyers or home movers who want extra cash once they are in the property to make home improvements or buy furniture.
With an equitable charge, legal consent is not required by the first charge lender which speeds up the application process and this product uses Hometrack valuations which makes it even faster for clients who want access to funds quickly.
This also makes it a good choice for leasehold homeowners with a very short lease, who want to borrow funds to extend the lease on their property, and it can be as a third charge up to £25,000 and so could be used by borrowers with an existing second charge mortgage.
There are no construction restrictions and the product is available to clients with adverse credit. Given all of this flexibility, it is unsurprising that the rates are not the lowest in the market. However, this is a good stepping stone product for clients who have exhausted other avenues and have a plan to refinance onto a longer-term solution once they are able.
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LATER LIFE LENDING
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