LoansBrain What is a Secured Loan?
What is a Secured Loan or a Second Charge Mortgage?
How do you apply for a Second Charge Mortgage?
A second charge mortgage is also often referred to as a secured loan. Technically a first charge mortgage is a secured loan so a second charge mortgage is the recognised term of use. A second charge mortgage is money that you borrow that is secured against an asset you own, usually your home. The interest rates tend to be higher than a mortgage but cheaper than an unsecured personal loan. It is important to understand how secured loans work and what could happen if you can’t make the payments.
Second charge mortgages currently have to be applied for through a Master Broker who will take your client through the application process.
There are different names for secured loans, including: • Second mortgages or second charge mortgages • Home equity or homeowner loans • Debt consolidation loans (although not all debt consolidation loans are secured)
Why would your Client want a Second Charge Mortgage? When: • Your client is already on a competitive mortgage rate • Your client is tied into their mortgage with heavy redemption penalties • Your client has an interest only mortgage • Your client needs a larger sum over a longer term to bring the monthly cost down • Your client needs funds quickly with no upfront fees to pay • Your client’s credit status has changed since their last mortgage application • Your client needs early settlement flexibility • Your client needs to raise capital for a nontraditional purpose • Your client is unable to obtain a remortgage or further advance • Soft credit searches at quotation stage is important LoansBrain - What is a Secured Loan?
From 21st March 2016, second charge mortgages became regulated in accordance with the Financial Conduct Authority (FCA). Advisers with the appropriate permissions can deal with the advice process themselves and will then place the loan through a Master Broker. Alternatively, Advisers without such permissions will be required to refer their client to a Master Broker. The Master Broker will then provide the advice (as they have the permissions required) and also manage the loans process. It is unusual for a second charge lender to deal with an Adviser directly and not go through a Master Broker.
What is a Master Broker A Master Broker is a bit like a packager. They have been given authority by the lender to sell their products on their behalf and will contact the customer, gather the information required and be the point of contact for the loan application. Refer directly and easily to Fluent Money, the UK’s largest second charge Master Broker.
How much commission can I earn from a Second Charge Mortgage. The level of commission is a matter between an Adviser (acting as the introducer) and the Master Broker. It varies but is currently in the region of 5% of the loan subject to a maximum of £2,500. For a second charge mortgage of £30,000, this currently would be circa £1,500. Page 1 of 1
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