I recently secured a second charge mortgage for an unusual case which came with a few challenges along the way. My client had an existing mortgage on a property in London with Santander, and had a second charge loan with another provider for £40,000 on which he was paying 10% interest on. He also had £50,000 worth of credit card debt which he had built up from home improvements, on which he was paying 18%.
A second charge mortgage is generally used as a last resort if you are unable to remortgage, often as a solution for someone with a lot of debt, to sit behind the main mortgage. The combination of higher rates was costing my client a fortune, so he required consolidation of both the existing second charge loan and his credit card debt.
There was, however, another challenge added to the mix, as my client was self-employed and had been travelling out of the country for approximately a year with no earnings or proof of accounts. High street lenders normally require a solid 2 to 3 years’ worth of accounts to successfully obtain a mortgage, so a first charge loan was out of the question in my client’s circumstances.
Because of this, I had to find a second charge lender who would be willing to consider my client without taking any current income into account, using only an accountant’s certificate to show projection of his next year’s earnings. Incidentally, I was able to secure this with the current lender of the existing second charge.
I was able to acquire the necessary second charge mortgage loan for my client at a 25 year term, which would ensure that he would not have to keep reviewing it. This deal also meant that in 2 years’ time my client would be able to remortgage at a much cheaper rate once he was earning again.
I managed to secure the second charge loan at a variable rate of 5.9% for the 25 year term with no early repayment charges, so that when my client is earning again we can review for free and remortgage at a much cheaper rate without penalty.