We all know that First charge lenders tighten their appetite at higher LTVs, although we have seen movement latterly with 90% LTV appearing once again.
The continuing issue is acceptable income sources for your clients borrowing requirements, which is restricting options for capital raising by remortgaging and further advances.
This is where you must focus on alternative solutions, just for a few Seconds, consider all the mortgage and product transfers you may have done over the past 2 or 3 years, many on 5 year fix rate, many millions of people are now in lockdown 3.0 and may need to change or upgrade their living space. Home improvements are rising to the top of the “must do” list, equally a time to revisit finances and restructure.
It will be the 5th anniversary of the Mortgage Credit Directive this year and market polls show that some mortgage advisers still do not consider a second charge, when reviewing or advising on their clients additional borrowing needs.
This is equally important during the term of their current product! – do you look at a Second Charge as an alternative to a remortgage, if further borrowing is needed?
Communicate with your clients now and regularly, they may have borrowing needs you are not aware of. The answer could be a Second Charge, especially whilst they are within the Early Repayment Charge period. There will be many of your clients looking at home improvements, wishing to have more room, a home office perhaps.
Take a look at our recent case study to illustrate this point, you can also see current criteria parameters to show the breadth of lending available and current rates.
The customers wanted to debt consolidate, raise additional funds for home improvements and to pay for their wedding. One applicant was previously employed and had moved to self-employed with one year’s accounts.
Becky was able to source a lender and secure a second charge mortgage saving the client’s £223 a month, this included the additional funds needed.
New Second Charge £91,000, payment £633 per month, 2-year fixed rate, 80% LTV