The value of new business in this area of the mortgage market went up by 23% to £108 million in May 2019, according to new figures from the Finance & Leasing Association (FLA). Meanwhile, the number of new agreements increased by 22%.
Fiona Hoyle, head of consumer and mortgage finance at the FLA said: “The second charge mortgage market remained buoyant in May, as monthly new business reached more than £100 million for the second time this year.”
What are second charge mortgages?
A second charge loan is, quite literally, a second mortgage. It is a loan which is secured against your home in the same way as a standard mortgage. Homeowners can take a second mortgage out with another lender, so can shop around to find the best deal.
The loan can be used a bit like a remortgage or personal loan to raise additional money for things like home improvements.
Commonly they are used by people who are already on a good rate and don’t want to remortgage away from this to raise money.
Others use it to avoid paying early repayment charges associated with remortgaging or because they have experienced credit problems and may therefore find switching to a new deal tricky.
May’s increase in second charge lending marks the ninth consecutive month of new business growth.
Back in April the FLA reported a 24% rise in new second mortgages. Hoyle said: “This is great performance for what is an increasingly popular product.”
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