Naked in larned ks - Consolidating first second mortgage loans

Converting unsecured debt into borrowing secured on property also puts a home at risk.

We intend to repay the second charge quickly so it is easier to keep it separate.' They have borrowed £100,000 through Shawbrook Bank at 7.4 per cent a year fixed for five years.

There was a £499 set-up fee but no penalty if the loan is repaid early.

A second charge loan may suit borrowers who have had payment problems, for example due to job loss or illness.

These homeowners are often refused an increase on their first mortgage, but a specialist lender may take a different view.

This may be more suitable for short-term borrowing or consolidating costly card debt.

Because personal loans are unsecured, the lender has no claim over your home if you run into financial difficulties.

Some lenders consider certain borrowers too old or too risky to increase their loans.

But some borrowers also prefer to leave an existing mortgage in place because they would lose an attractive interest rate if they remortgaged, or there might be a steep exit penalty for switching.

Tougher lending rules are forcing more homeowners to turn to 'second charge' loans to fund home improvements, such as extensions, and consolidate debt.

Industry figures show a 25 per cent rise in the sums borrowed this way in the three months to the end of May against the same period last year.

Personal loans from high street banks are usually limited to £25,000.

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