A second Mortgage or Secured Loan is one secured on the same property by a lender other than the first mortgagee. Secured Loans are offered by some banks and virtually all finance houses. By contrast, building societies tend not to offer these unless they already hold the first charge.
Although the homeowner loan is secured on the property, it ranks after prior charges. This means that the lender is taking a higher level of risk that with a conventional mortgage, and will charge a higher rate of interest to reflect that risk.
If another lender is approached for additional finance, a questionnaire will be received by the existing lender making enquiries about the conduct of the account and details of the mortgage. In applying for the secured loan, the applicant will have given consent for this information to be released. A lender is not obliges to supply information to the second lender and a fee is normally charges for supplying the information.
If the
secured loan is granted, the lender will notify the first mortgagee and will create the charge on the property. Sometimes, if the conduct of the loan deteriorates significantly, first and second mortgages will co-operate on litigation for recovery.
The existence of a second charge can be an early warning sign of problems, especially if the borrower has already been turned down for a further advance by the first lender. In particular, finance houses tend to charge higher rates of interest, commensurate with higher risk, indicating that the borrower may be more than anxious to secure a lump sum urgently. Alternatively, the borrower may be capable of taking on the extra debt without the risk of inability to service both
secured homeowner loans
Another form of borrowing is
bridging finance.
Jenny Austin is an expert in
bridging finance, as a fully qualified financial advisor she can provide advice on
secured homeowner loans and
secured loans
