Secured loans should be considered alongside remortgages under “best advice” rules when the second charge market is brought under the regulation of the Financial Conduct Authority next April, a survey of brokers revealed.
The research, carried out by The Lending Wizard at the Financial Services Expo, found that 88% of brokers surveyed thought second charges should considered but 34% admitted they had never used one as an alternative to a remortgage.
Gareth Broome, business development manager at The Lending Wizard, said: “When searching for additional finance for clients the re-mortgage tends to be the most common option chosen by advisers.
“It goes without saying that most advisers are more familiar with the further advance route than they are with secured loans.
“However the obvious limitations on further advances and stricter eligibility requirements have made the secured loan option a more attractive alternative in many situations.”
But Broome said it is important to understand in which particular circumstances a secured loan could be preferable over a further advance.
He added: “Clearly advisers feel that recommending a re-mortgage isn’t always the best option and in certain situations exploring alternatives may be worthwhile.”