What is a second charge mortgage?
A second charge mortgage is a type of loan, which is commonly used to help people consolidate debt, fund home improvements or any other large purchase you can think of.
The loan is taken out in addition to your existing mortgage, hence the term "second charge". It is also commonly known as a "secured loan" or "homeowner loan".
With this option, a property is taken as security against the loan. As a result, lenders are usually more relaxed with their criteria compared to other options. Therefore, it is a useful option to use if you have been rejected for an unsecured loan, remortgage or further advance.
It can also help those looking for larger loan sizes, as lenders are usually more comfortable lending bigger sums of money when a property is used as security. This is because they can repossess the property and get the money they have lent back if you fail to repay.
If you are looking to use this option to consolidate debt, it is important to be aware you may be extending the terms of the debt and increasing the total amount you repay.
Is a second charge mortgage right for me?
Depending on your personal situation and the reason for the loan, a second charge mortgage could be the right solution for you.
We have over 35 years’ experience helping customers get these solutions. Some of the common reasons you may look into this option include:
Declined for unsecured finance - Qualifying criteria for second charges is less strict as a property has been used as security against the loan. This means you may have a greater chance of being accepted compared to unsecured funding options.
You will face high early repayment charges by remortgaging - Many mortgage providers impose early repayment charges if you want to end your deal earlier than agreed. These can be expensive, and may make remortgaging a very unattractive option.
Avoiding re-mortgaging - You may have a good deal on your current mortgage and don't want to lose it by remortgaging to raise additional funds. Arranging a second charge means your existing mortgage can be kept at its current rate, and you can raise the extra money you need.
When you need to borrow a larger amount of money - If you are completing a big project, a second charge mortgage may be the best option. This is because you can access bigger loan sizes than some other funding options.
What are the borrowing terms on a second charge mortgage?
Repayment terms are flexible. You decide if you would prefer a longer or shorter repayment period, depending on your needs.
If you decide to spread your repayments over a longer amount of time, you will reduce your monthly payments. However, you may end up paying more in interest over the course of the loan.
Choosing a shorter repayment period will mean your monthly payments are higher, but you will pay less interest on your loan overall.
It's important for you to weigh your options up carefully and consider what you would value most. Always make sure you can comfortably afford the solution you choose, as your property may be at risk of repossession if you fail to repay.
We have repayment options ranging from 3 to 30 years, offering you a chance to find a repayment term that best suits your needs.
What are the interest rates for second charge mortgages?
Interest rates will vary based on many factors. These factors could include the sum of money you are looking to borrow, the repayment term and your credit score.
We take the time to understand your situation, so that we can find the best product we have available.
Since we are a mortgage broker, we have a range of different lenders on our panel. Through our panel, we have access to over 600 products, with a range of rates. This includes both fixed and variable options.
How does the amount of equity I have in my house affect a second charge mortgage?
Lenders will take into consideration the amount of equity in your home when determining loan sizes.
If you have paid off a large sum of your mortgage, you will have more equity in your house. So if you have not paid off much of your mortgage, you will not have much equity in your home.
Ideally, you want to have as much equity in your property as possible, as this can unlock larger loan sizes and better terms.
How do I apply for a second charge mortgage?
We have made applying for this option as simple as possible. With the help of our knowledgeable team, we can help remove some of the stress that can come with applying for a loan.
➀ Make an enquiry – Call us or enquire through our online form. You will have to answer some questions about your application, so we can understand your circumstances. This will allow us to find you the best product we have available.
➁ Leave it to us – We will search our database to find the best solution to your unique situation.
➂ Receive your solution – We'll get in touch with a solution if we can find one that is suitable. Then it's up to you if you want to proceed. If you do, we'll help you through the rest of the process.
One of our expert team will contact you to talk through your application and the results of our findings.
How do I enquire?
We want to make the process of applying as smooth as possible. Here are the main steps involved in our application process.
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Step 1: Submit an enquiry
Fill out our enquiry form online or call us to speak directly to one of our advisors.
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Step 2: Speak to the team
After reviewing your enquiry, one of our experts will call you to discuss your situation.
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Step 3: We'll handle the rest
If we find you a product that fits your needs and you're happy, we'll take care of the rest for you.
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Step 4: Completion
Once all of the paperwork is completed, you will receive your funds.
