What has happened to secured loans?

Secured loans have been around for years, yet to some it seems as if they’ve suddenly disappeared.  Earlier this year, secured loans were changed to ‘second charge mortgages’ following the European Directive that came into effect on 21st March 2016. 

The market has had to overcome regulatory challenges quick and effectively. As a result, second charge mortgages have started to become better known and are making their mark in the mainstream market. Recent figures from the Finance and Leasing Association show that the second charge market has increased by 17% in the year to August 2016.

This new legislation has made the second charge market more accessible, as the advice process becomes aligned and fee structures become more flexible. The rule change also provides added security to customers and raises the awareness of the product within the market place.

Second charge mortgages can help a variety of people; there is no ‘typical’ customer. These loans aren’t only for those who have fallen victim to poor circumstances and need to rebuild their credit rating. 

A second charge may also be a suitable option for customers who: 

  • Want to retain their existing mortgage
  • Are looking for flexibility in the repayment of the loan
  • Want to use the loan for reasons not permitted by other forms of finance
  • Are seeking a higher Loan-to Value ratio than is otherwise available 
  • Want to use a buy-to-let property as the security

Because they cater for such diverse circumstances, it is important that brokers include second charge mortgages as part of their standard toolkit. This way, they can assess each client on an individual basis and recognise the opportunities for second charge mortgages when they present themselves. 

← back to posts