Second Charge Mortgages are suitable for borrowers looking to raise additional capital through releasing equity from their existing property, without the need to remortgage. Second charge mortgages are ideal for business purposes as this type of lending is ideal for injecting cash into a business. Raising money from a residential property can allow the entrepreneur to purchase a business property and pay business tax liabilities.
The main four reasons for residential clients are:
- Second Charge Mortgages allow the client to retain low rate or interest only mortgage
- Avoid large redemption penalties from First Charge
- Raise capital against UK Property to purchase Foreign Property
- Client has several unusual income sources
The Finance and Leasing Association established Second Charge Mortgages have recorded their highest volume increase by 24% in April, compared to the same month in 2018. Second Charge Mortgages lending value has risen by 23% to £102m. For the last 12 months there were 25,243 written worth £1.135bn which seen an overall increase of 11%.
Figure 1.0 New Second Charge Mortgage Lending
Source: Finance & Leasing Association