How to

How second charge mortgages can help older borrowers

Paula John
Written By:
Paula John

Second charge mortgages can provide useful finance for the over-forties who may not be offered extended borrowing by their existing lender.

The average age of borrowers taking out a second charge loan is early forties. This may well be because of recent regulatory changes to the mortgage market, which mean that some lenders will not allow you to take out a mortgage beyond the age of 65, the traditional age of retirement.

The Mortgage Market Review of 2014 led to many lenders tightening their lending criteria dramatically, and while some have extended their maximum lending age, borrowers over 40 attempting to remortgage their main loan with many will get short shrift if they opt for a 25-year mortgage term.

If you are over 40 and you need extra cash for school fees, to fund a sabbatical or finance a loft conversion, a second charge might be an ideal solution rather than a remortgage. Unlike many large mainstream mortgage lenders who use computerised systems to make their lending decisions, many smaller second charge lenders look at each application on a case by case basis. A qualified human underwriter may well approve a loan for an older borrower that an algorithm would reject.