Since the FCA took over the governing of second charge mortgages in April 2016, the process for Mortgage Advisers to follow when recommending a second charge became the same as a standard mortgage. We’ve created this short guide to help you to understand the key second charge milestones, so that you know what to expect at each stage of the process.
Many companies who provide second charge mortgages, like ourselves, will ask you to complete a quick quote form. This allows us to get an idea of how much you want to borrow, the time period you want the loan for and what you want to use the funds for. When one of our Mortgage Advisers calls you to discuss your enquiry, they will have already used this information to start to look at the different options available to you. Our second charge mortgage search will not affect your credit rating in any way.
When a Mortgage Adviser calls you to discuss your quick quote, they will complete a Fact Find over the phone with you. The questions which they will ask will provide a much more thorough overview of your income, property and employment, to enable them to advise on the best product available to suit your needs. They will then produce a Key Facts Illustration (KFI) detailing all the costs of the loan. If you are happy with the product we have recommended then we will submit your details to the lender who will perform a ‘soft’ search on your credit file. A ‘soft’ search doesn’t show on your credit file, it just simply allows the lender to decide whether they wish to lend to you.
If the lender thinks that they will lend to you, pending satisfactory documents, credit checks and valuation, then they will issue you a Second Charge Mortgage in Principle.
If you are happy to proceed then we will need to underwrite your application before sending it to the lender. This means that we will need to fully assess your income and expenditure, credit profile and references. Normally we will need you to supply us with the following documentation to allow us to do this:
Once we are happy that the documents match the information you have previously provided us with, we will work with the lender to process your application. At this stage, the lender can still reject your application if they are not happy with the property, amount you wish to borrow, your employment status or income. If a lender does decline your application then we will try to explain the reasons for this to you and cascade your application to the next best available product.
The lender will require for a valuation to be carried out so that they can get an accurate figure of how much your property is worth before they decide whether they will lend you the funds. Some Mortgage Advisers will ask for you to pay for the valuation up front and some will include the valuation within the cost of their fee for arranging the second charge. We allow our customers to choose either option – you can read more about our fees here.
A member of our team will contact you to arrange a suitable date for the valuation to be carried out.
Once the lender has finished processing your second charge mortgage application and they have confirmed that they are happy with the property valuation, the lender will send you a formal offer. This document will include any fees which the lender may charge you for arranging the second charge mortgage.
If you are happy to proceed then your Mortgage Adviser will contact you to confirm the funds will be transferred into your account.