Your IndustryJul 30 2015

Guide to Second Charge Mortgages

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CPD
Approx.40min

    Guide to Second Charge Mortgages

      pfs-logo
      cisi-logo
      CPD
      Approx.40min
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      Introduction

      By Emma Ann Hughes
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      A second charge mortgage is a type of loan which uses the borrower’s home as security and currently falls under consumer credit red tape.

      Second charge mortgages take secondary priority behind the borrower’s main (or first charge) mortgage.

      This means that if the borrower is unable to make their mortgage payments and the property is repossessed, the first charge mortgage lender is repaid from the proceeds of the sale before the second charge lender or lenders.

      Second charge mortgages are currently regulated as consumer credit but the European Union’s Mortgage Credit Directive applies equally to first and second charge mortgages.

      As a result of this dictat from Europe, the government decided to move the regulation of second charge mortgages into the Financial Conduct Authority’s mortgage regime when the UK implements the Mortgage Credit Directive.

      This guide will explain how the lending and advising process for second charge loans is set to change; the impact of regulation; and the impact on pipeline business.

      Contributors of content to this guide are; Marie Grundy, managing director of V Loans and Nuala Wheeldon, compliance director of Fluent Money.

      In this guide

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