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You are here: Home / Second Charge Mortgages

Second Charge Mortgages

What is a second mortgage or second charge mortgage?

A homeowner can only have a second charge mortgage, if they already have a first mortgage. It is one way of borrowing extra money after you have taken out your main mortgage.

Why would you need a second mortgage?

It’s a means of borrowing against the value locked up in your home that may be suitable in some specific circumstances. Your main or first mortgage is usually the least expensive way to borrow money, as this lender gets first call on the equity of your home in the unfortunate situation of a repossession, whereas a second charge lender gets the spoils. As such second charge lenders take on more risk, and they charge a little more.

When should I consider looking into a second charge mortgage?

The two main considerations are:

  • is it more cost effective for you
  • would it provide funds where none are available by other means of borrowing

Here are some of the main examples where a second mortgage might be just be of help:

  • If after taking out your main mortgage on a great rate, your credit rating has declined, perhaps due to ID Theft or a missed payment on a mobile phone contract. You need some money to help your children put down a deposit on their first home. It may be more cost effective to leave that loan in place and take out a second mortgage rather than re mortgaging the whole lot at a punitive rate.
  • You decide, like many others, that it is better to extend your home rather than move and ask your main lender for a further advance, they say ‘No’ and you are tied in with high Early Repayment Charges for a couple of years. It may well be cheaper to take out a second mortgage for a couple of years and then re mortgage the whole loan to a new first charge lender once your Early Repayment Charge period has ended.
  • You are recently self-employed, possibly a professional. You have gone from being say an employed dentist, to a self- employed dentist but have only a 9 months trading history. You need a piece of equipment for the surgery urgently. The first charge lenders require a minimum of 1 year’s accounts and tell you that they won’t lend for business purposes. A second charge mortgage could provide a solution.
  • You want to purchase a second home and have plenty of equity in your main home. However you have a rather large mortgage on a very low lifetime tracker, set up on an interest only basis. When you speak to your lender about raising some money they tell you that borrowing money for a second property is not allowed. You look into the possibility of a re-mortgage and find that lenders do not issue loans on an interest only basis these days and the interest rate that you would pay is around 3 times what you are paying currently! A second charge could allow you to retain your interest only, low cost loan.

These are just some examples of how a second charge mortgage could help you raise some money, however there are lots of others.

Call our friendly team on 0800 316 5756 to discuss your options.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

There are lots of places to get mortgage advice. Here are just a few reasons to use us.

  • Independent mortgage advice
  • Our advisers have at least 15 years experience
  • Extensive mortgage knowledge
  • Straightforward, honest mortgage advice
  • We are independent from all lenders
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  • Call us on 0800 316 5756 to find out more

Featured Article

Cheaper with a second charge mortgage

Cheaper with a second charge mortgage

March 8, 2016 By admin

Last week we received a telephone call from a long standing customer. 9 years earlier John had sought our advice to purchase a new home and we had organised a great lifetime tracker mortgage which in the current period of low interest rates had performed well for him; very well. He said that the product that […]

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Copyright Enhanced Wealth Limited | All rights reserved | 140 Long Lane Bexleyheath Kent DA7 5AH | Authorised and regulated by the Financial Conduct Authority | Site Terms


Registered in England & Wales No: 04125057 THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Typically, we will charge £350 to a maximum of £495 in certain situations for arranging your mortgage and we will be paid commission from the lender, please ask for full details. We are entered on the FCA Register No 207532 at www.fca.org.uk/register/. The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers in the UK. The Financial Conduct Authority does not regulate will writing, finance, commercial mortgages and some aspects of buy-to-let mortgages.