It can be a little daunting trying to bring up the topic of a second charge mortgage, especially if your client's focus is just on re-mortgaging.
If it's the wrong move to do a remortgage, or a further advance isn't an option - could a 2nd change mortgage be achievable?
Finding more about your client's financial situation and getting to know what's going on in their personal and professional life. Once you do this you can get a more complete picture of where you can offer advice and where they might benefit from a second charge mortgage.
Let's look at some scenarios:
1. Wedding
You follow the Robinsons on Facebook and you see that they have announced their daughter is getting married, but have put off naming a date as they need to save up for the wedding they want. A quick call to them to discuss how a second charge mortgage could pay for all or in part of the wedding and or honeymoon costs.
2. Debt Consolidation
Jenny McTavish calls you as concerned that rising interest rates and how will affect her current mortgage and whether she should refinance. In speaking with her and getting a picture of her current financial situation, you find out she has an unresolved loan. A remortgage would be expensive due to the interest rate being significantly higher than her current mortgage.
A second charge mortgage could pay-off the loan and a couple of high interest rate credit cards. This will give her a higher disposable income and the load paid off, will put her in a better position when she does need to refinance in a couple of years.
3. Taxes
Your client started a new business a couple of years ago as an IT consultant and credited a limited company. His in your office to see if he can re-mortgage to pay off a couple of outstanding tax bills, however, he's only one year into his five-year term and re-mortgaging now would prove costly. However, a second charge mortgage would solve his problem and would not affect the rate of his existing mortgage.
4. Bank of Mum and Dad
The Panaser's son has just got married and they want to start a family. The flat they live in is too small and they would like to get on the property ladder. They have some savings but not enough to buy the three-bedroom mid-terrace around the corner from his parents that's just come on the market. Talking to them about a second charge mortgage so their son does not miss out on the home and free babysitting.
5. Home Improvements
The Smith's come into the office to discuss re-financing their mortgage and during the course of the conversation, you find out they are expecting their fourth child next summer. They think they will have to move as the house is already too small for their family. They choose the areas because it's children friendly and the schools are so good, but most of the houses in the area are just like theirs.
Take the opportunity to discuss with them how a second charge mortgage could help pay for an extension to their house allowing them to stay in their much loved neighbourhood.
6. Property Purchase
Before the pandemic, your client loved to travel abroad. Two years later having been quite poorly with Covid, they prefer to holiday in Lieu enjoying the wonderful beaches, restaurants and music festivals. Recently becoming semi-retired they plan to spend more time there but they are not ready to sell up their current home. They have approached you to see if they can arrange an equity release for a deposit on a flat as staying in a B&B is getting expensive. In looking at the equity they have in the existing home they have enough to buy the flat out right, making them a cash buyer which helps to strengthen their purchasing power. And they do decide the make the move permanent, the load will be paid off along with their other mortgage.
In summary, a second charge mortgage help your clients significantly if you take the time a get to know them. It's an opportunity to help them with a dilemma or help them help a family member. If you are not having the conversation with your clients you are missing the opportunity to help them and you are losing out on an additional revenue stream.
