Debt consolidation enquiries tend to reach fever pitch in the first few months of a new year, when consumers take time to reflect on their finances and start to make plans for change. This can often be a good time to start to get things back on track and finish the year in a better financial position than where they started.
Products like second charge mortgages are a common solution for those borrowers looking to consolidate debt into one single, more manageable payment. In fact, the market has seen significant growth over the last few years as more borrowers have begun to realise the flexibility and speed of this capital-raising solution.
Unlike remortgaging, a second charge mortgage allows borrowers to access the equity in their home without disturbing their first charge mortgage. This can be hugely financially beneficial if the borrower wants to retain the low and preferential interest rate on their first charge mortgage. It can also be a useful way of avoiding paying an early repayment charge (ERC) for leaving the first charge mortgage early.
One of the many other benefits of a second charge mortgage is that the flexibility of the product means multiple goals can be addressed simultaneously. This is particularly true in situations when a borrower requires more than just a straightforward debt consolidation product.
For instance, a second charge mortgage can help to provide a solution to a variety of different lending problems like unusual income and property types, as well as adverse credit. This can be particularly useful if the client needs to consolidate debts and carry out home improvements but is struggling to raise capital with other mortgage lenders because of a bad credit score.
Clients with unique credit circumstances that do not fit the mould of mainstream borrowing, such as a history of adverse credit, self-employed income or irregular income patterns, can also often find themselves struggling to find a solution for their needs.
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In fact, a combination of all these factors can also make it difficult for brokers to place the business, even with a specialist lender, as the level of complexity and degree of risk each lender is willing to take varies widely across the market.
As a specialist lender with over 50 years’ experience helping clients who do not fit the mould of mainstream lending criteria, Norton Home Loans is well-versed in helping borrowers with extremely complex credit profiles find a solution to address their capital-raising needs.
This includes catering to borrowers with complicated and intricate financial needs, such as those who may be looking to capital raising to consolidate debt while also using the money to manage a divorce settlement, pay a tax bill or invest in a new business.
It also includes those who may be looking to consolidate debt but may have found themselves locked out of other forms of credit because they only work reduced or part-time hours due to age, ill health or family commitments.
Cases like this often require bespoke and tailored solutions that standard lenders and vanilla second charge mortgage products may not cover. However, by adopting a more holistic approach and assessing the needs of each client individually, Norton Home Loans will consider applications from all these borrowers, provided they meet the lending criteria.
Given the flexibility and speed of raising capital using a second charge mortgage, it is little wonder that the product’s popularity is continuing to soar, particularly when it comes to helping borrowers consolidate debt and get back on track with their finances.
For those borrowers with more additional financial complexities such as a poor credit rating, irregular income streams or unforeseen expenses, however, choosing a lender well-versed in handling more complicated cases is vital to ensure your client gets the capital raising solution best suited to their needs.
