Second Charge Mortgage

Second charge mortgages are often referred to as second mortgages because they have secondary priority behind your main (or first charge) mortgage. They are a secured loan, which means they use the borrower’s home as security. Many people use them as a way to raise money instead of remortgaging.

A person can take out a second charge mortgage for a variety of purposes, such as home improvements, deposits for additional property purchase, business, wedding etc. A second charge mortgage allows you to use any equity you have in your home as security against another loan, and means you will have two mortgages on your home. 

Equity is the percentage of your property owned outright by you, which is the value of the home minus any mortgage owed on it. For example, if your home is worth £250,000 and you have £150,000 left to pay on your mortgage, you have £100,000 equity. A second charge mortgage can be a loan  of anything from £1,000 upwards. Lenders now have to comply with stricter UK and EU rules governing mortgage advice, affordable lending and dealing with payment difficulties. This means that lenders now have to make the same affordability checks and ‘stress test’ the borrower’s financial circumstances as an  applicant for a main or first charge residential mortgage. Borrowers will now have to provide evidence that they can afford to pay back this loan.  If you need  to raise extra cash for a specific reason, without disturbing your existing mortgage arrangements,this can be the ideal choice.

For more details on what an affordability assessment might involve, and the evidence you may be required to provide to support your second mortgage application, book a free consultation or contact our offices today, LET’S TALK!