Published 8 March 2016 · Last reviewed 25 February 2017 · Older article — see current rates
I have a second charge Secured Loan, can I still get a Remortgage if I still want the loan to remain in place.
In theory if you have a second charge Secured Loan it does not prevent you from changing your existing first change mortgage for a better rate. However in practice it can be a nightmare. How so? Read on to find out the pitfalls and how to combat them.
Firstly, most lenders do not like existing second or third charges. To them it is another layer of bureaucracy they could do without should they need to repossess. It also might suggest the client has needed to consolidate debt in the past.
Some first charge lenders shy away for systems reasons as they point of sale and back-end administration systems are unable to capture the involvement of another lender, this particularly an issue to lenders that originate mortgages then sell them on.
Whatever the reason for the shortage of first charge lenders there are still options available and affordability is the key to acceptance. How so? Well the first charge lender will deduct the second charge payments from the clients net income so assess whether the loan is affordable.
The lender will also look closely at the name of the secured loan provider as certain lenders are associated with sub prime /Adverse credit loans and this may get them nervous.
Also the secured loan lender may have a drawdown facility which may eat into the property’s equity if released and first charge lenders take heart from knowing the client has their own funds to loose and not just finance as they are believe they will work harder to make their mortgage payments.