Case Studies

Case study – second charge

Paula John
Written By:
Paula John

A second charge is a logical solution for borrowers needing to finance a new kitchen, without sacrificing the very low rate they have secured on their main mortgage.

Jo and Alan Springwell, 39, moved from Bristol to Bath  in December 2010. They took out a £400,000 lifetime tracker charged at 0.99% over Bank Base Rate buy a three-bed detached cottage for £550,000. They have not done any work on the property – a 100-year old structure in good condition – but now plan to install a high end kitchen, complete with Aga. They have paid off almost £100,000 fro their loan, and the property is now worth £650,000. They could remortgage to finance the kitchen work, but don’t want to give up their current mortgage deal, which has them on a pay rate of 1.74%.

“We have been meaning to get around to replacing the kitchen for some time, but didn’t want to lose our mortgage deal,” says Jo. “We want to do the kitchen properly, and are looking to spend about £32,000 on it.”

The Springwells visited an independent mortgage adviser, who arranged a £32,000 second charge, providing them with the finance they need quickly and simply.. “The interest rate is closer to 4% than 2%, but it makes perfect sense and we are perfectly happy with the outcome,” Jo concludes.