Second charge mortgages have increased by 24% in the first quarter of 2019, compared to the previous year, recent figures from the Finance & Leasing Association (FLA) show.
According to data released by the FLA, there were 25,243 new second charge mortgage agreements in the 12 months to April 2019, which was an increase of 14% year-on-year, while during the first quarter of 2019 there were 2,206 new agreements, which was a significant rise of 24% compared to the previous year.
This follows data released from the trade body in March showing a 47.8% reduction in the number of second charge mortgage repossessions in Q1 2019 versus the same time period in 2018, while this type of mortgage accounted for 0.08% of all repossessions in the year to March 2019.
Second charge mortgages are a type of secured loan that may be useful to borrowers if they are having difficulties getting a personal unsecured loan and/or their credit rating has fallen, making a remortgage or a further advance from their first charge mortgage provider not possible. Second charge mortgages are often used for debt consolidation to repay other debts or to fund major home improvements. A secured loan isn’t right for everyone but there are some circumstances where it can make sense, for instance:
While this type of credit is a way of securing a large loan, often to a maximum of £500,000, they can be highly risky as the loan involves putting the borrower’s house as security against the loan. Borrowers should avoid second charge loans if they can find the money using lower cost credit and if they are already struggling to meet your current mortgage repayments. Read more about getting out debt.
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