Specialist Lending - May 2017  

Guide to second charge lending

  • Grasp how the second charge market has grown.
  • Learn why advisers use master brokers and what clients are suited to second charges.
  • Understand how the second charge market will develop.
CPD
Approx.60min
Guide to second charge lending

Introduction

A year on from the Mortgage Credit Directive and the growth of the second charge lending sector appears to have stalled.

But with second charge loans now regulated in line with first charge mortgages there are many in the industry who believe this will herald an era of improved products and record low rates.

Now that brokers must consider second charges an option, this should help with awareness of this type of lending and lead to greater uptake.

It is still early days but Harry Landy, managing director at Enterprise Group, helps dispel the myth that second charges are only suitable for less credit worthy customers.

He says: "Our clients are typically prime. The average for us has changed little in the last couple of years. Last year, the second charge was £60,000 behind a £235,000 first charge, giving a total of 57 per cent LTV."

This guide seeks to explore the market's growth, how advisers are using master brokers in the process, what type of clients will benefit from second charges and where next for the market. 

Contributors to this guide include: Harry Landy, managing director at Enterprise Group; Mark Dyason, managing director at Thistle Finance; Joshua Gerstler, financial adviser at The Orchard Practice; Fiona Hoyle, head of consumer and mortgage finance at the Finance  and Leasing Association; Andrew Fisher, managing director at Freedom Mortgages; Steve Harness, commercial director at The Loans Engine; and Peter Williams, sales director at John Charcol.

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. According to Mr Williams, what has helped customers feel more protected and comfortable with the second charge market?

  2. Mr Dyason says advisers are using master brokers because they have what?

  3. Mr Fisher says a typical second charge mortgage can be completed in what time period?

  4. Ms Hoyle lists three circumstances in which a second charge may be used, but which of these does she not mention?

  5. Mr Harness warns some intermediaries are sleepwalking into inappropriate product recommendations because of what perception they have of second charges?

  6. What is the lowest rate being offered in the second charge market now?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Grasp how the second charge market has grown.
  • Learn why advisers use master brokers and what clients are suited to second charges.
  • Understand how the second charge market will develop.

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