Is a remortgage or second charge mortgage right for home improvements?

Mortgage broker

Homeowner dreams of the day they will pay off their mortgage, but a growing number of people are checking out with their mortgage broker ready to take a second mortgage. They end up using the money in financing home extensions and IVF treatment instead of looking forward to a mortgage free financial lifestyle.  The latest data clearly shows second charge mortgage leading galloping ahead and has leapt to the highest since 2008. 2008 saw the £887m of second mortgages to homeowners a 36% increase 2015 and more thrice the second mortgage in 2011-2011.

Why are people opting for a second mortgage?

I still wonder how to do the homeowners workout with the mortgage, how expensive are they and the downside available. Why can’t the homeowner just get a further advance for the existing mortgage broker?

What a second mortgage?                                  

It’s a loan that allows the homeowner use an equity you have in home security and it’s effectively sitting on the first mortgage.   The second mortgage is got from a separate lender; hence the homeowner seeks a new mortgage broker with the many specialist firms. The first mortgage always takes precedence over the second home loan.

Why not remortgage where you will use your existing mortgage broker- or take out further advance if you only need to raise some cash for home improvement?

Reason shun an advance

To homeowner ii wouldn’t make sense to refinance the first mortgage, others lack the options to refinance and it doesn’t suit homeowners to remortgage.  For an instant, homeowners with a low lifetime base rate tracker can loss their rate of remortgaging, hence they choose a second charge running alongside it and it still applies to borrowers with an interest-only deal.

Avoid a higher rate

The homeowner may find out that with the current mortgage broker for a loan they will re-mortgagee the first mortgage at a new rate higher than the original if the market allows or even agree to check for an interest-only loan in repaying the mortgage.

The borrower will also shun down re-mortgaging due to the age as some older homeowners won’t pass the affordability test – and a change in circumstances resulting in income drop.

If the mortgage is has a higher repayment rate it’s always cheaper taking into account the second mortgage and avoids remortgaging as directed by the government.

Opting for short loan

If you need to borrow small amount of money whey can you choose personal loan unsecured loan which is better?

If the rates on the second mortgage are down compared to the firs mortgage rethink of remortgaging.

How does a second mortgage work?

  • You must be a homeowner to get a second mortgage even if you don’t live in the property.
  • The must be ready to have two mortgages for your home using any equity you have in your home.
  • The second mortgage is anything from £1,000+
  • You will have to provide evidence on how to repay the loan

Lastly, the second charge mortgage is cheaper than remortgaging always rushed for a secured loan that lacks any early repayments penalties beyond three years. If you are managing to repay the first mortgage avoid the second one as you may end up losing the property and if you move your house you have the option to repay the second charge or transfer it to a new mortgage. Get more advice on second mortgage check with Mortgage brokers Melbourne at