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What is a Second Charge Buy To Let Loans

The UK’s buy-to-let property market has always been something of a secure haven. Today, it’s viewed united of the most incredibly lucrative investment opportunities of recent years, both for newcomers and experienced investors alike. Data published by Zoopla indicates an 11% increase in privately rental prices during the first three months of 2022, taking the common cost of renting a UK home to £995.

This equates to an extra £88 per month, compared to average rents at the beginning of the pandemic. The tenancy renewal numbers we’ve got seen up to now in 2022 are unprecedented, commented Gareth Atkins, manager, Lettings at Foxtons.

Rising demand, severely limited stocks and rapid rise in rental prices are reasons for renewal and tenants are responding. All this represents a golden opportunity for those who are able to acquire the desired properties in the high demand corners of the country. Investments like these are often funded with a range of loans and mortgages, including second-charge buy-to-let secured loans.

Second-Charge Borrowing:

The term “second-charge” applies when a loan is issued against a property that already contains a loan/ mortgage secured against it.

For example, your home includes a value of £350,000 and you’ve got repaid £250,000 of your mortgage. This leaves you with £250,000 equity in your property, against which you may take out a secured loan or mortgage for any purpose. As this can be a ‘secondary’ loan issued against your home, it’s referred to as second-charge borrowing.

With house prices skyrocketing to unprecedented highs, second-charge loans have become increasingly popular among new and established BTL investors.

Homeowners are finding themselves sitting on small fortunes because the equity they need to be tied up in their homes increases at a record pace. All of which represents money that may and perhaps should be put to good use, as demand for affordable private lets across the united kingdom likewise hits a record-high.

Second Charge Who may be eligible for BTL Mortgage?

Qualifying for a second charge mortgage follows the same basic principles as applying for a traditional mortgage. The equity you’ve got tied up in your home will determine how much you’ll borrow. Second charge loans are usually issued up to 75% up to LTV.

This may mean that if you have got £200,000 in equity, you’d be able to borrow a maximum of £150,000.

In addition, your application is going to be processed subject to the same old credit checks and general financial stress tests. you may provide extensive proof of income, together with any supporting evidence the lender requires to verify your capacity to meet your repayment obligations.

However, traditional mortgage options are available for people with credit problems. If you’re concerned about your credit score, discuss bridging finance for BTL along with your broker.

In addition, remember that any applications you submit which are subsequently declined could inflict further damage to your credit score one more reason to enlist independent broker support before applying and checking your repayment terms employing a bridging loan calculator beforehand is strongly recommended.

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