Fixed Rate 2nd MortgageFix rate 2nd mortgage
Your customer is on one of the lowest long-term interest rates of all times? Second place creditors often stress that a lender with an extreme low mortgage rate (e.g. a legacies tracker of only 0.69%) would loose his one-off business if he made a return commitment to free up extra own funds. However, how many of your customers are so low in the long run that they cannot profit from debt restructuring?
When they are, then they should certainly consider a second charging mortgage to stick to their available agreement. But, if they are on long-term rate that do not fit into this class and are able to conserve cash, a simple remortgage could make sense. Your company will be able to offer you a simple solution. Are the borrowers really bound by this fixed interest rate?
A further possible benefit of second loads is that they are suitable for those who need extra credit but are "tied" to a fixed interest rate through early redemption fees (ERCs). Yes, it will probably cost them to get out of their deals and re-mortgage to free up more capital. However, even if fixed-rate interest rate economies are taken into consideration, many customers can still make overall savings, especially those with a high capital ratio.
It may not be necessary to have a secondary mortgage with a higher interest rate just to prevent the payment of the ERC. Although the customer is tied to a fixed interest rate, his current creditor may still be able to provide another upfront payment that is separated from the principal credit, which may still be less expensive than going to another secondary creditor.
They have to do the totals for your customer because their best options depends on their circumstance, the actual mortgage and the established creditor. Secondary market transaction speeds can be critical for real estate transaction that requires quick execution. This is not why remembergage dealing is always sluggish.
When your customer wants another deposit with his current creditor and has a lot of capital and good value for money, many creditors will free up money within a few days of the request. And even if they want to take out extra loans and choose to change creditors, this can still happen quickly. What are the unaffordably high charges?
The structure of secondary remuneration differs from that of the primary insurance markets, not least because a distribution company (e.g. packer or master broker) is usually part of the pool. Traditionally, the secondary mortgage backend all-in percent mortgage pricing scheme means that the customer does not have to prepay anything, but this advantage can be offered at a rate of up to 10% of the credit amount.
Charges for the second charges are decreasing and some resellers are shifting to an uncomplicated lump sum charging scheme, which includes a prepayment facility. When considering a second customer service cost, it is important to consider all charges, even those for the packer (as most creditors in this industry still do not go directly to the broker).
The charges drop to seconds, but there is a big distinction between the packing managers, as well as your research. A good rationale for considering secondary mortgage options may be to be flexible, often allowing full redemption before the maturity time. However, many first loaders also allow the borrower to pay back up to 10% of a default mortgage liability per year at no fee.
Thus if your clients were remortgage, they could clear some of the extra borrowings even faster. Check again why your customer needs the extra credit and their repayment policy. Will they have enough available earnings to repay their second rate loans early? Otherwise, consider whether a return fee could be less than a second cheap.