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    • Gareth43
    • By Gareth43 4th Dec 17, 9:41 AM
    • 6Posts
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    Gareth43
    Prestige finance
    • #1
    • 4th Dec 17, 9:41 AM
    Prestige finance 4th Dec 17 at 9:41 AM
    Hello
    I'm in the process of taking out a second charge loan with prestige finance for home improvements, I'm ok with the initial interest rate which is fixed for 5 years but after that it becomes variable and I am concerned they will be able to change it whenever they want. I plan on changing my current mortgage in 5 years when my partner goes back to work full time as we will then be able to afford to remortgage for the cost of our current balance and the £65,000 I am borrowing from prestige finance, this way I don't have the loan for 25 years with prestige and I am not at the mercy of their interest rates. I have bad credit so not a lot of options available to me. Any advice?
Page 1
    • ACG
    • By ACG 4th Dec 17, 11:30 AM
    • 15,906 Posts
    • 8,149 Thanks
    ACG
    • #2
    • 4th Dec 17, 11:30 AM
    • #2
    • 4th Dec 17, 11:30 AM
    You have already said you plan to wrap the loan up into the Mortgage in 5 years, so you will not be at the mercy of any variation in the rate.

    What are you looking for advice on?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Gareth43
    • By Gareth43 4th Dec 17, 11:49 AM
    • 6 Posts
    • 1 Thanks
    Gareth43
    • #3
    • 4th Dec 17, 11:49 AM
    • #3
    • 4th Dec 17, 11:49 AM
    If anyone had had dealings with the company and if wrapping up the loan in 5 years in to the remortgage is the right thing to do.
    • kingstreet
    • By kingstreet 4th Dec 17, 11:53 AM
    • 32,390 Posts
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    kingstreet
    • #4
    • 4th Dec 17, 11:53 AM
    • #4
    • 4th Dec 17, 11:53 AM
    Make your plans assuming you won't be able to do what you want in five years.

    In my experience, something else will go wrong and you'll end up unable to remortgage, or similar.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Gareth43
    • By Gareth43 4th Dec 17, 12:28 PM
    • 6 Posts
    • 1 Thanks
    Gareth43
    • #5
    • 4th Dec 17, 12:28 PM
    • #5
    • 4th Dec 17, 12:28 PM
    On that advise I would not be able to do the much need work to the house and in 5 years the roof would have collapsed and the walls would be crumbling costing me £100,000's rather than a few grand now
    • Richey_
    • By Richey_ 5th Dec 17, 7:24 AM
    • 288 Posts
    • 326 Thanks
    Richey_
    • #6
    • 5th Dec 17, 7:24 AM
    • #6
    • 5th Dec 17, 7:24 AM
    £65,000 is not a few grand!!!

    You are taking a risk, obviously. You need to weigh up if it is worth it, against the house value etc. Something to throw in, are you sure you will be able to get a re mortgage in 5 years time? They will assess your age, your income, your LTV etc. Have a backup plan, when this Brexit business hits there’s much unknown coming, be prepared to have a contingency plan in case house prices drop, affecting your LTV to be able to borrow more, be prepared in case interest rates go up - this will affect both your mortgage and your rate after 5 years. Also be prepared that the UK is likely to go into a recession again, although the government think this will not be as long as the last one. During the last recession, it was almost impossible to get a lot of lenders to lend mortgages. Also take advice as once the secured loan is on the property, if you changed mortgage suppliers would the secured loan become the first charge on the property? A lot of mortgage companies will not lend unless they are the first charge. You would need this loan company to agree to go back to being the second charge, which they may not be willing to do. This could trap you in to only using your current mortgage supplier until the secured loan is paid off and if they refuse the remortgage, you could have issues.

    All I am trying to say is be careful and calculate the risk. I am not scare mongering, I am trying to put the thought of the worst possible scenarios to you. Your repay vehicle to just re mortgage in 5years is in my opinion a very risky one when you are borrowing against the house such a high amount of money.
    • djphig
    • By djphig 5th Dec 17, 9:29 PM
    • 12 Posts
    • 1 Thanks
    djphig
    • #7
    • 5th Dec 17, 9:29 PM
    • #7
    • 5th Dec 17, 9:29 PM
    There is no risk in regards to being able to remortgage with another lender. Prestige Finance sits 2nd on land registry and it stays that way. You are arranging a Second Charge not a first and that is the offer you will sign. Prestige will not have a right to go first.

    Generally second mortgages are only kept for about 4-5 years before people remortgage, generally onto a better rate. There are always more specialist lenders for people with adverse credit. I highly recommend speaking to a reputable mortgage broker when it comes to remortgaging
    • Gareth43
    • By Gareth43 6th Dec 17, 12:35 PM
    • 6 Posts
    • 1 Thanks
    Gareth43
    • #8
    • 6th Dec 17, 12:35 PM
    • #8
    • 6th Dec 17, 12:35 PM
    Thanks all for your comments,
    I have re evaluated the amount I wanted to borrow and reduced the amount to 40k by leaving out some of the work which could possibly be done at a later stage and only consolidating one of my debts ( the other is paid off in 1.5 yrs) what concerned me was the second charge and how reputable prestige is, risk wise i think it needs to be done after 5 year fixed i would have paid 26k off the 40k so to remortgage for my current mortgage value plus the 14k outstanding on the second charge is a lot better than borrowing 65k.
    • djphig
    • By djphig 6th Dec 17, 8:26 PM
    • 12 Posts
    • 1 Thanks
    djphig
    • #9
    • 6th Dec 17, 8:26 PM
    • #9
    • 6th Dec 17, 8:26 PM
    Hi Gareth,

    Prestige Finance is a reputable company. All second charge mortgage providers are governed by the FCA in the same way the likes of Halifax, Natwest etc are. The only difference really is that they are a more specialist lender and as such, not so readily available on the high street. Second Charge Mortgages were previously called secured loans but are now regulated in exactly the same way as normal mortgages so nothing underhand or “dodgy” goes on.

    You must take into consideration that although after 5 years you might have paid £26k but don’t forget you pay interest every month so your outstanding balance won’t reduce by the same amount as your monthly payment.

    Any questions please let me know - I am a second charge mortgage advisor
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