Second Charge Mortgages

• Equity You can only borrow up to a certain amount based on the equity you have in your home. This is the difference between the current value of your property and what you still owe on your first mortgage.
• Separate loan It’s completely separate from your first mortgage, meaning different lenders, terms, and interest rates could apply.
• Repayment You make monthly repayments for both your first and second mortgages simultaneously.
• Priority If you can’t repay and your home is repossessed, the first mortgage lender gets their money first, followed by the second mortgage lender.

Reasons for taking a second charge mortgage

• Raise extra money It can be a way to access funds for various purposes like home improvements, debt consolidation, or unexpected expenses.
• Avoid remortgaging penalties If you’re locked into a fixed-rate mortgage with early repayment penalties, a second charge mortgage might be an alternative.

Things to consider before taking one

• Higher interest rates Second charge mortgages typically have higher interest rates than first mortgages.
• Risk of repossession If you can’t repay, you risk losing your home.
• Debt burden It adds another monthly repayment, increasing your overall debt.