Case study: £750k second charge rescues ‘computer says no’ financing deal

The homeowner wanted to take part in an investment opportunity as well as making improvements to his home. His existing lender refused to give him another advance, while his broker, Property Finance managing director Adrian Hills, had warned him against disturbing the mortgage.

“This deal was never going to work as a remortgage,” he said. “I had secured an extremely attractive lifetime tracker deal for my client when I helped him to purchase his home a number of years ago and it made no sense to disturb this, plus the existing lender’s ‘computer said no’ to a further advance.”

Instead, the broker referred him to master broker The Loans Engine. The packager performed a scan of the market, identifying suitable lenders in its network, until it found a deal for the full £750,000 at 3.88% interest.

For the service it charged a £295 application fee – a flat-fee the packager introduced last year to replace its all-encompassing master broker fee in a bid to raise the appeal of the products. On top of this the client paid a £495 lender product fee and a valuation fee.

The deal represented The Loans Engine’s biggest to date and was processed and ready for withdrawal in a total of three weeks, the firm said.

“The second-charge market is undergoing radical change – rates start from as low as 3.83%, with fees of only £295, flexible criteria and underwriting; in that sense, the sector is in great shape to meet the needs of customers,” said chief executive Ryan McGrath. “Whether the applicant is a high-flying executive or a hard-working tradesman, a great outcome awaits,” he added.

For McGrath the level of intermediary activity in the second charge market has shifted in recent times. “Seconds are not what they used to be, and intermediaries are starting to recognise this,” he said. For McGrath, second charges have increasingly been positioned as credible alternative financing options for those stuck with existing lenders.