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Case study – second charge

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


John and Nancy Lithgow, 42, have a mortgage of £200,000 with a high street mortgage lender on a lifetime tracker deal priced at Base Rate plus 0.35% – they are currently paying 0.6% interest.

The Lithgow’s home, a four-bed 1930s detached house in Havant, Hampshire is worth around £500,000, so they have plenty of equity.

The Lithgows live on the coast and have always wanted to buy a boat. They have decided now is the year to do it and plan to buy a small motor boat which will cost in the region of £50,000. They do not have sufficient savings for the purchase.

“We looked at remortgaging to a bigger loan to access some of the equity in our property, but we would have had to give up our incredibly good mortgage deal, which runs to the end of the mortgage term,” explains John. “Nancy and I consulted an adviser, who has identified a second charge loan which will provide the finance we need. The rate is higher than our mortgage rate (most are!), but not nearly as high as a personal loan, and we are delighted with the deal.”

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