Second Charge Mortgages

Second Charge Mortgages

What is a Second Charge Mortgage?

In simple terms a second charge mortgage is a second charge on a property that already has a mortgage against it. 

In technical terms the way a second charge mortgage works is separate from your original and will depend how much equity you have in your property, as you will be borrowing against it. That means that a new product, new lender, new rate and term will be applied. 

Why and when would a second charge be a good idea? 

A second charge mortgage can be a good idea, and an option to release equity from your property if you’re looking for an alternative to re-mortgaging. Re-mortgaging is not always an option especially in cases where:

  • You are still on an introductory rate and face early repayment charges
  • You don’t want to lose your current deal
  • Don’t want to extend your current term
  • You can’t get any further borrowing or an advance from your lender
  • Your credit rating has gone down since you took your original mortgage out

When considering your options take into account that your second charge mortgage rates may be higher. The risk to the lender is greater, they could lose money if your house became repossessed so look to minimise it where possible. 

Loans are based on the amount of equity in your property as that gives you your maximum borrowing amount. You will, however, need to meet the criteria of the lender to qualify, including income, affordability and credit history. 

Understanding all of your options and whether a second charge mortgage is viable is important. Speaking to an advisor can put you in the best possible position to getting a loan based on individual circumstances. Get in touch with us at the Online Mortgage Guru and we’ll put you in touch with a suitable specialist.

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