Mortgage Companies that allow second charges?

Spiritguide21

Hi all,

Looking for recommendations please and the situation is this; I’m going to be relocating for work. The company is paying all relocation costs and lending me £100k interest free to assist with the increased house prices in the new area, which is nice. Understandably, they will require a charge against the new property in respect of this.

My current mortgage company, First Direct, who are excellent in every other way, insist on being the first and only charge holder therefore I cannot stay with them, which is annoying as I’m still in a fixed period with them, but otherwise I could port the mortgage and take additional lending with them.

I am therefore looking for a good mortgage company that will allow my employer to take a second charge against the property. Googling doesn’t really help as all I get is results for companies that lend second mortgages, which isn’t what I’m looking for.

Financially there shouldn’t be any issues; I’m borrowing well within my means and with my equity and the funds from my employer will have a deposit of around 30-35%. I just need a company that will lend me a first mortgage but allow a second charge?

Also, help to buy is a consideration therefore if the company will do a help to buy mortgage AND allow a second charge (or third if you count the government’s charge) that would potentially be a bonus as one of the properties we are considering is a new build.

Many thanks.

davidmcn

Maybe the folk who deal with the relocation can help, as they'll know which first chargeholders they encounter?

AnotherJoe

Try Santander and Nationwide as I have a second charge againsta house that was initially mortgaged with the former and then switched to the latter

financegeek

From my experience the lenders that just won't consent to a second charge are few and far between (First Direct being one of them!)

most of the main high street lenders (Barclays, Nationwide, Halifax, Santander, HSBC, Metro) don't have an issue, although your solicitor would need to confirm their consent assuming both charges are to be registered at the same time?

In your situation i'd be tempted to use a broker to source my mortgage and get them to check with the lender first that a 2nd charge would be acceptable.

I'm not sure how Help to buy would fit with the two charges and whether they'd give consent for your employer to sit as a 3rd charge. This is probably something you need to clarify asap if you're potentially going down this route.

amnblog

Forget Help to Buy. No additional charges allowed.

Spiritguide21

Thanks for the replies. Looks like help to buy is out so we’ll ditch that option.

Yes both charges will be registered at the same time. Using a broker seems like a sensible suggestion although I’m wary as I had a nightmare a while back due to a tiny and unjustified default from Virgin that has since been removed - the broker could only get me high risk high interest mortgages whereas the lenders I spoke to direct (Tesco and First Direct) didn’t care about the default at all as it was clearly unwarranted. Guess I better give brokers a second chance!

Thrugelmir

What are the terms of the interest free loan? May possibly impact on the affordability of the mortgage.

Spiritguide21

It’s only repayable out of bonus payments so shouldn’t affect day to day affordability at all.

Thrugelmir

Spiritguide21 wrote: »

It’s only repayable out of bonus payments so shouldn’t affect day to day affordability at all.

What's the position if you leave their employment, for example? Other scenarios need to be considered as well. £100k is a signficant amount to be repaid out of taxable income.

While the loan is interest free. Will still be regarded as a taxable benefit incurring you an element of cost. Interest on the loan being calculated at HMRC official rates to determine the benefit.

Spiritguide21

Yep already looked at the BIK implications, will average £40 a month across the term of the loan, starting at about £70 and reducing. That won’t affect affordability.

Repayment won’t be an issue - already worked for the company for six years so know them well, bonus is as good as guaranteed and will have the loan cleared in seven years with some spare.

Not 100% sure on what happens if I leave, not that I have any intention of doing so but you never know. Either it’s repayable in full which just means we’d either remortgage or downsize slightly, or the charge remains until the property is sold.

Either way, I can’t see that affecting the initial mortgage. As mentioned above, we’re borrowing well within means, we could cover the additional £100k through a mortgage if need be but might as well have it interest free.