Spotting the second charge lifeline – Maeve Ward

by: Maeve Ward, sales and operations director, secured lending, Shawbrook Bank
  • 02/06/2016
  • 0
Spotting the second charge lifeline – Maeve Ward
Second charge mortgages can be an effective way of helping customers who have fallen on hard times, Shawbrook's Maeve Ward looks at the key lifeline scenarios for mortgage advisers to look out for.

Mortgage advisers have a valuable role in recognising that otherwise good customers, no longer have to be trapped by the effects of unforeseen events.

A second charge mortgage can make all the difference between surrender and survival so it’s important advisers recognise when a secured loan can throw the borrower a lifeline in troubled times.

Prisoners of the downturn

These are individuals, who prior to the downturn had an A1 credit payment profile, but were financially stressed. They would have looked to consolidate all of their credit into one manageable monthly payment, but left it too late and were caught when lenders closed their doors to business. They were left with nowhere to go, forcing them into debt management or an Individual Voluntary Arrangement (IVA), limiting future borrowing when the market started to show seeds of recovery.

Hostages of ill health

This occurs where either the customer or a close family member has been taken ill, leading to financial difficulties. Emotional constraints will have placed financial matters on a back seat or medical care will have forced them to be stretched.

Victims of an unforeseen accident

Without income protection in place, accident victims can struggle to maintain all of their commitments, leading to an impaired credit profile, and limited options for further borrowing once they have returned to work.

Trapped by redundancy

The economic downturn sadly saw many borrowers facing redundancy. This impacted directly upon the ability to preserve their credit due to the loss of income.

All of these customers should be able to provide evidence of the unforeseen event and that they are maintaining or improving their situation, demonstrating that they have taken control since the event. Their credit profiles and scores will highlight both their before and after payment records, painting the credit picture that lenders require and bringing to life the story behind the event that changed their life.

Mortgage advisers can provide a lifeline to customers looking for a fresh start as they will have gone through the unforseen event that saw that customer become a victim of circumstance with them, enabling the customers to put the past behind them.

A second charge mortgage is an alternative or in many cases the only solution that provides a stepping stone to customers looking for a fresh start and back onto the high street leaving the past behind them.

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