Second Mortgage Consumer Protection

A second mortgage is a loan secured against the equity in a property that is not a first mortgage. The second mortgage will come from a different lender than the first mortgage.

A first mortgage on a residential property is regulated by the Financial Services Authority and covered by the Financial Services and Markets Act 2000. A secured loan, however, is not covered by the Act.

Instead, an individual who obtains a second mortgage is entitled to several different forms of protection depending on the value of the loan.

Knowing the facts about a second mortgage and the remedies available to the borrower upon default is important considering the second mortgage will be secured against the borrower’s home.

A second mortgage with an initial value of less than £25,000 will be regulated by the Consumer Credit Act 1974.

Borrowers should be made aware that the Consumer Credit Act provides for a seven day cooling off period. During this time they can assess the terms and conditions of the second mortgage and redeem it if they feel the product is not right for their needs.

A second mortgage with an initial balance exceeding £25,000, however, will not be regulated by the Consumer Credit Act.

Because of this, borrowers should take out an insurance policy that will offer them protection if they cannot make the payments on the second mortgage due to accident, sickness, unemployment, or death.

There are many different policies available from various insurers to cover the payments on a second mortgage and terms and conditions vary considerably. Borrowers should research the market thoroughly before signing up to a policy.

If a borrower does fall into financial difficulty and cannot keep up the repayments on their second mortgage, they should contact the lender immediately to discuss possible solutions.

This is because a second mortgage is secured against the borrower’s home and if the borrower defaults on their repayments the lender has the right to repossess the property and sell it in order to recover the funds.

Because of the risks involved with borrowing money through a second mortgage, potential applicants should consider the downside carefully. Applicants should also consult with an independent mortgage broker to receive impartial and expert advice before securing a second mortgage against their home.

Visit UK Mortgage Source for up-to-date Second Mortgage information

Benefits Of Cheap Mortgage Protection

Cheap mortgage protection is one of the most underrated forms of insurance and protection on the market today. Consumers often do not believe that it is completely essential if you own your own home, despite the fact that it can help to protect the single biggest investment that the majority of people will ever make in their lives.

In fact, cheap mortgage protection could feasibly enable an individual to keep the roof over their head should they be unable to work due to unforeseen unemployment, long term illness or accident.

Sadly, many people who become out of work due through no fault of their own can often find that their home, which they have worked long and hard for, eventually gets repossessed if they cannot manage to keep up the mortgage repayments.

The benefits of cheap mortgage protection are immense. The first and main benefit that all homeowners should consider is the fact that it could actually keep a roof over their heads should they be out of work for a period of time through no fault of their own. In fact, cheap mortgage protection would take the stress of being unable to make repayments off an individual. Very few people would have enough savings to live off while they got well or found themselves another job and the State benefits would not even make a dent in helping towards a mortgage repayment.

Secondly, cheap mortgage protection can last the lifetime of a mortgage. It is designed to protect home repayments for the life of the mortgage, although it will only pay out for one twelve or twenty-four month period usually. The cover will only be cancelled before the end of the term of the mortgage if you cancel it yourself or you make a claim

Finally, cheap mortgage protection can remove some of the stress placed on a homeowner ill equipped to cope with financial difficulties on that scale. The peace of mind it gives is most definitely a major benefit!