Prior to the completion of your mortgage you will be provided with your chosen lenders tariff of charges. They will detail all other potential costs not already included in the total cost of credit; for example: Service and Administration Fees, Arrears and Defaults Charges and Repossession and Litigation Fees.
‘Secured loans’ and ‘homeowner loans’ are now called ‘second charge mortgages’
Due to recent regulatory changes secured loans are now called second charge mortgages, and this page contains some of the general information you will need to know.
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Second charge mortgages - the details …
APRC from 5.1%
Secured loan representative example
(if you chose to add fees to the loan)
Assumed borrowing of £35,000 over 120 months, plus a broker fee of £2,870 and lender fee of £367.50 would result in monthly repayments of £476.14, the borrowing rate is 8.6%, the APRC is 11.2% (variable), total charge for credit would be £22,136.80 and the total amount payable would be £57,136.80
By taking out a secured loan you are borrowing money that is secured against your home. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
How long can I take out a second charge mortgage for, and what can it be used for?
You can take out a second charge mortgage from 3 to 30 years. They are suitable for a wide range of purposes - here are some of the most popular choices:
- Debt Consolidation
- Home Improvements
- Home Furnishing
- Motorhome or Caravan
- Medical Bill
- Freehold Purchase
- School Fees
- Business Loans
- Tax Bill
- Purchase Second Home
- Purchase Rental Property
Types of available borrowing
Fixed rate mortgages
The interest rate you pay will stay the same throughout the length of the fixed rate period no matter what happens to interest rates.
Things to consider
Fixed rate deals are usually slightly higher than variable rate mortgages, but you will have peace of mind that your monthly payments will stay the same during the fixed rate period, helping you to budget. Should you wish to pay back your loan early some lenders may charge an early repayment fee. However, when looking at the various options available our expert advisors can look for the most flexible loans that suit your particular needs. At the end of the fixed period we recommend you should look for a new deal two to three months before it ends or you'll be moved automatically onto your lender's standard variable rate, meaning your payments may start to change.
Variable rate mortgages
With variable rate mortgages, the interest rate can change at any time. Make sure you have some savings set aside so that you can afford an increase in your payments if rates do rise. Variable rate mortgages come in various forms and you can overpay or leave at any time:
Standard variable rate (SVR)
This is the normal interest rate your second charge mortgage lender applies and it will last as long as your mortgage or until you take out another mortgage deal. Changes in the interest rate may occur after a rise or fall in the base rate set by the Bank of England or whichever reference rate the lender may use.
Tracker mortgages move directly in line with another interest rate – normally the Bank of England's base rate plus a few percent. So if the base rate goes up by 0.5%, your rate will go up by the same amount. Usually they have a short life, typically two to five years, though some lenders offer trackers which last for the life of your mortgage or until you switch to another deal. If the rate it is tracking falls, so will your mortgage payments. However, if the rate it is tracking increases, so will your mortgage payments. You may have to pay an early repayment charge if you want to switch before the deal ends.
A valuation of the property that the mortgage will be secured against is required. The valuation will be conducted by a Surveyor from your chosen lenders preferred panel and we will arrange this for you. There will be no separate charge for the valuation as this will be included in the broker fee. Our advisers will discuss the broker fee with you and whether you wish to add it to the mortgage or pay it upfront.
You should think carefully before securing debts against your home. Failure to repay your mortgage may result in charges for late payments, missed payments and defaults. Your home may be repossessed if you do not keep up repayments on any mortgage secured on it.
Before taking out any mortgage you should consider whether you are aware of any circumstances now and in the future which mean that your regular income will reduce. It's important that you can afford the repayments now and continue to do so throughout the term of the loan.
If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.