2nd Charge Mortgages

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What is a 2nd Charge Mortgage?

A second charge mortgage is an additional secured loan taken out on the same property, on top on an existing mortgage.

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Why Choose a 2nd Charge Mortgage

A second charge mortgage is a useful option for when you need to access equity from an owned property but don’t want to re-mortgage.

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How it Works

Unlike re-mortgaging, where your basic mortgage is changed to a different one, a 2nd charge mortgage is an additional mortgage paid alongside your existing mortgage.

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Second Charge Mortgages at a Glance

What is a Second Charge Mortgage?

A second charge mortgage allows you to borrow more money against an existing property, via a separate, second mortgage. It can be a useful alternative to re-mortgaging if you need to release funds, especially if there are penalties or early repayment charges associated with changing your current mortgage.

A second charge mortgage is a secured loan which works by using the capital in your property as collateral. The amount you can borrow is based on the different between the value of your property, and the amount still owed on the original mortgage.

A second charge mortgage provider will require evidence that you’re able to keep up repayments on both loans, especially as you’ll usually be charged a higher interest rate on a second mortgage.

The first charge mortgage company may also need to provide permission to the second charge lender, so it is a good idea to check with your existing mortgage provider before applying.

Key Benefits

  • Your existing mortgage remains the same (beneficial if interest rates have gone up or your credit rating has deteriorated)
  • Avoid the penalties or early repayment charges associated with re-mortgaging
  • Typically easier to access than unsecured personal loans (especially if you’re self-employed)
  • You can typically borrow a larger sum of money than with an unsecured loan
  • It can be easier for individuals with poorer credit scores to get approved

What Can a Second Charge Mortgage be Used For?

Second charge mortgages are typically used to raise money for a specific reason or project. This could include:

  • Major repairs
  • Home improvements
  • Extensions
  • Personal expenses or paying off other debts

Who is Eligible?

You need to be a property owner in order to be considered for a second charge mortgage, however you don’t need to live in the property. Second charge mortgages may also be taken out on second homes and buy-to-let properties. The key thing is that there is sufficient capital (property value minus existing mortgage value) built up in the property. You will also need to be able to demonstrate that you can keep up repayments on both loans.

To find out more about second charge mortgages and if you could be eligible, please get in touch with one of our property finance specialists today.

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