Second charge clients can be found everywhere – Maeve Ward

by: Maeve Ward, managing director, property finance, Shawbrook Bank
  • 26/07/2016
  • 0
Second charge clients can be found everywhere – Maeve Ward
You may believe that the traditional second charge mortgage market is just for customers looking to raise capital for home improvements, or consolidate credit repayment but you should think again, writes Maeve Ward, managing director, property finance, Shawbrook Bank.

Whilst this assumption would be absolutely right; these are two perfectly acceptable uses for a second charge mortgage, it is important to remember that this important funding option can assist customers in a range of other ways. So it’s time to start digging through your client bank to find those customers who were perhaps declined a remortgage, or where a replacement mortgage was not viable, and consider whether a second mortgage might be an alternative. As yet undiscovered within your files, could be some of the less common examples of customers who could benefit from a second charge mortgage. Let me share you with a few examples.

Customers who send their children to private school

BBC research suggests ‘the cost of putting a child through a 14-year private education in the UK stands at £286,000’. This is considerably above what a customer could borrow via an unsecured personal loan. A second charge mortgage could enable your customer to borrow the total school fees needed, and in turn secure their child’s future in the event of circumstances changing outside of their control.

Self-employed borrowers

We’re all familiar with the dreaded January tax deadline, and many hope that once submitted there will be nothing to pay. But the reality is that many are left with tax owed, which for some can often run into thousands of pounds. The question to ask yourself is, how many customers have access to sufficient amounts of disposable cash today to cover this? The answer is, not many. A second charge mortgage offers a fast and efficient way to raise funds to pay the bill in full, avoiding a penalty.

Property investors

Are you aware that investors can use the equity in their portfolio to release cash to purchase another property, or perhaps improve a property bought at auction? A second charge mortgage is a potentially a quick and easy option, and cheaper than traditional bridging finance.

These are just three examples of where a second charge mortgage is a great alternative finance option that may not have occurred to you amid the demanding pressures of your day-to-day activity. Some lenders no longer charge early repayment fees, and allow free and unlimited or restricted overpayments reducing the term, the balance and interest. Plus fixed rates with no penalties are now available, great for budgeting purposes, as well as allowing you to continue to revisit your clients.

So I think it’s time that you made second charge mortgages, second nature when thinking of suitable alternative finance options for your customers.

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