Able to remortgage with second charge?

Greystoke01

I recently was refused a remortgage by Barclays due to having a second charge resulting in a high LTV.

However, I'm quite confused by this and don't really understand their logic - the way I see it is:

House value £200,000
Mortgage £155,000
2nd Charge £52,000

Now, I appreciate the combined totals are over 100% LTV - but surely the mortgage company as first charge therefore have first bite at the funds if a repossession happens? In that case are they not only concerned with their portion of the debt - which is around 78% LTV and therefore relatively safe?

If anyone knows anything about this kind of scenario I'd be very interested to see if I will have to be stuck on my current deal

Thanks in advance

silvercar

The mortgage would be first charge on the property and so they should feel safe in terms of getting their money back. However, lenders don't like to repossess homes, so if they think your total borrowing is a risky venture they can decide not to lend to you.

Greystoke01

Thanks, that seems to be the attitude at the moment. Perversely, they would not be concerned if the second borrowing was not secured on the house

silvercar

Greystoke01 wrote: »

Thanks, that seems to be the attitude at the moment. Perversely, they would not be concerned if the second borrowing was not secured on the house

Because the house would then be safe if you failed to keep up with repayments on the second charge.

One option may be to try to get unsecured loans to pay off the second charge. Though I would expect lenders to look at your total commitments when making borrowing decisions.