Helping you access additional funds

Second charge mortgages are typically used when homeowners need to borrow a substantial amount of money but do not want to remortgage their entire property or face early repayment charges on their existing mortgage. The funds from a second charge mortgage can be used for various purposes, such as home improvements, debt consolidation, education expenses, or business investments.

The existing mortgage on the property is considered the “first charge” as it has primary priority over any other loans or charges on the property. The second charge mortgage is thus referred to as a “second charge” because it ranks behind the first charge mortgage in terms of priority. If the property is sold, the first charge mortgage lender is repaid first from the proceeds, followed by the second charge mortgage lender.

The loan amount for a second charge mortgage is typically based on the available equity in the property, which is the difference between the property’s value and the outstanding mortgage balance. The borrower can access a percentage of this equity as a loan. Second charge mortgages usually have fixed monthly payments over an agreed term, typically ranging from 5 to 25 years.

The interest rates for second charge mortgages can vary and may be higher compared to first charge mortgages. The rates depend on factors such as the borrower’s credit history, the loan amount, and the loan-to-value ratio. It’s important to consider any associated fees, such as arrangement fees, valuation fees, legal fees, and broker fees when assessing the overall cost of the loan.