FT Adviser – Guide to Second Charge Mortgages

Last month the Financial Conduct Authority confirmed regulation of second charge mortgages should move from the watchdog’s consumer credit regime into the mortgage regime.

This guide will explore the current make-up of this type of loan, which is secured against a property behind the existing loan – the first charge. This means that in the event of the property being repossessed, the first charge lender has first call on the sale proceeds.

In this case, currently the second charge lender will be at a greater risk if the sale proceeds are ever less than the loans outstanding.

This guide will make sure you know what change is on the way for how this product is regulated and help you confidently talk about this sort of mortgage with clients who need cash but do not wish to remortgage.

Contributors to the guide were: Matt Tristram, owner and co-founder of Loans Warehouse and Clearly Loans; Steve Walker, managing director of Promise Solutions; Paul Crewe, director of Smart Money; Mark Fry, managing director of Colonial Secured Loans; the Money Advice Service; and Alan Cleary, managing director of Precise Mortgages.

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