Second charge loans
Second charge loans can be secured against residential or Buy to Let properties. They are provided by specialist lenders and are generally short-term loans secured against the property, but where the lender has second call on the property if the borrower defaults.
Eureka Mortgages Bristol is a credit broker and not a lender
Second charges tend to be more expensive than ‘firsts’, but can still be an option for people seeking to raise capital – but whose main lender is unwilling to provide further finance, or where expensive early redemption charges would be incurred.
With a self-build mortgage, money is released in stages as the build progresses. Some lenders will lend you money to purchase land – typically 75% of the purchase price or value (whichever is lowest).
After this, the money for the build is released in stages. These stages can be fixed or flexible, depending on the lender, but usually there are five (see table below).
There are two methods by which the money can be released during the build – at the end of each stage (known as arrears stage payments) or at the start of each stage (advance stage payments).
With the arrears stage payment method, money is released after a valuer has visited the site and confirmed completion of the stage. This can cause some self-builders cash flow difficulties.
The advance stage payment method works in the opposite way, with money released at the beginning of a given stage, before work starts. This method has become popular as it provides positive cash flow during the build, making it easier to stay in your current house while the build progresses.
The stages of a build depend on whether or not you are building a traditional (brick and block house), a timber frame construction or if you are renovating or converting an existing property.The following table provides an indication of the typical stages:
Lifetime mortgages are a popular means for homeowners over 55 to unlock some of the value in their homes. Thousands of people in the UK already choose this method to supplement their retirement income.
A lifetime mortgage is a way of borrowing a set amount of money against the value of your home, in the form of a long-term loan, and without the need to move. You continue to own your own home, for the duration of the plan and as long as you are living in it – you’ll also be responsible for keeping your home in good repair.The loan is paid back using the proceeds from the eventual sale of your property. This is usually when you die or have moved into permanent long-term care.
The money released can be used for whatever you wish (so long as any outstanding mortgage has been paid off). You should be aware that taking out a lifetime mortgage could reduce your eligibility to means-tested benefits and could affect your tax position.
Also, as the interest is added to the loan, there may be no value left in your home at the end of the plan. Taking out a lifetime mortgage may also reduce the options that you have for moving or selling your home. You should talk to your Financial Adviser and/or solicitor about this if you’re at all unsure.
Before you think about equity release, you should also consider your other options -moving to a smaller property or one of a lower value will give you the maximum value from your home. You may also have other savings and assets that could help fund your retirement.
Equity Release Schemes may affect your eligibility to means tested benefits. Equity release products involve borrowing against or selling all or part of your home. There may be more suitable methods of raising the funds you need.
Equity release schemes may work out more expensive in the long term than downsizing to a smaller property.
You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone.
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Eureka Mortgages Bristol is a trading name of Eureka Financial Solutions Ltd, an appointed representative of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority. Eureka Financial Solutions Ltd is registered in England number 11567337.
Conveyancing, Commercial Finance and some Buy to let mortgages are not regulated by the Financial Conduct Authority.