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Case study – second charge

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A second charge is a logical solution for borrowers needing to finance a loft extension, who are locked into a fixed rate.
Case study  – second charge


Jen and Andy Summers, 35, moved from London to Nantwich in December 2016 with their four-year old twins. They took out a £150,000 five year fixed rate charged at 2% to buy a three-bed semi detached house for £320,000. They are now expecting their third child, and will quickly need more space. The Summers love their home and don’t want to move – nor are they keen to pay stamp duty and incur the other costs of moving. Moreover, their highly competitive five-year fixed rate comes with hefty Early Repayment Charges – if they were to remortgage in the first year they would have to pay their lender 5% of the mortgage – £7,500.

“We hadn’t exactly planned this, but we are delighted our family is growing and have decided to convert our loft into a master bedroom and ensuite,” explains Jen. “We have hired an experienced builder and the whole lot should cost around £30,000.”

The Summers visited an independent mortgage adviser, who arranged a £35,000 second charge, providing them with the finance they need quickly and simply and avoiding the ERC. “The interest rate is closer to 5% than 2%, but it makes perfect sense and we are perfectly happy with the outcome,” Jen concludes.

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Case study – second charge

A second charge makes sense for a couple who don't want to give up their cheap mortgage rate.