Paying Off Debt with a Second Charge Mortgage

The recent drop in UK inflation rates has brought a sigh of relief to many households, but for those struggling with debt, the road to financial stability is still a long one. With higher interest rates and increased living costs, many individuals are finding it difficult to make ends meet, let alone pay off their debts.

One solution that has gained popularity in recent years is the use of second charge mortgages to consolidate debt. By tapping into the equity built up in their homes, borrowers can make their repayments more manageable and affordable over the long term.

Consolidating debt with a second charge mortgage

According to figures from the Finance & Leasing Association, the second charge lending market has seen a surge in popularity, with new business volumes up 17% in February compared to the previous year. Debt consolidation continues to be a key driver behind this growth, accounting for 60% of all loan agreements.

For those struggling to pay off debt, a second charge mortgage can be a more financially astute option than remortgaging. This is especially true for those with a preferential fixed rate on their first charge mortgage, as they would likely move on to a more expensive deal and lose the lower rate on their first charge loan.

A second charge mortgage can provide a more affordable way to pay off debt

In some cases, a second charge mortgage can also help borrowers better manage their finances by reducing the number of monthly payments into one single amount and making budgeting more manageable by spreading the cost of repayments over a longer period of time.

However, it’s essential for brokers to explain the associated risks to every client, including the risk of repossession should they fail to keep up with repayments.

Norton Home Loans offers second charge mortgages ranging from £3,000 to £250,000, with a maximum LTV of 80% available. Applicants must be aged between 21 and 85 years of age and can secure a term of up to 25 years, enabling them to spread the cost of the loan over a longer period of time and gain greater flexibility in terms of affordability.

Norton Home Loans offers second charge mortgages with flexible terms

For those struggling with debt repayments, it’s worth speaking to a specialist lender about the benefits of second charge mortgages as a means of consolidating debt by borrowing against the equity in their home.

Managing debt with a second charge mortgage