Second Charge Mortgages
A second charge mortgage is essentially a loan that’s secured on your property, allowing you to borrow money whilst leaving your existing mortgage in place. In the process, the lender takes a legal charge over your property in a similar way to your current mortgage provider. If you’re considering a second charge mortgage, our trusted advisers have put together some core information to help you make the right decision.
How does a second charge mortgage work?
There are multiple ways to borrow money, with loans and credit cards being two of the most common methods. However, a second charge mortgage offers an alternative means of borrowing, as it’s a secured loan that uses the equity in your home as collateral.
A second charge mortgage is entirely independent from your existing mortgage, which means that payments will be taken separately alongside your usual monthly mortgage payments. Essentially, you will have two mortgages in place, which is why you must be confident that you can comfortably make the payments each month.
Why take out a second charge mortgage?
One of the main reasons why people opt for a second charge mortgage is that their current mortgage lender will impose large charges for early repayment or moving away to another deal. Alternatively, it could be that you’ve taken out a very good rate of interest on your current mortgage and remortgaging would mean moving to a much higher rate.
The pros and cons of a second charge mortgage
We’re dedicated to ensuring that our clients have all of the information required to make an informed decision. Here are some pros and cons to take into account before seeking further guidance on second charge mortgages:
Pro
You can remain on your existing mortgage deal without remortgaging, so there won’t be any early repayment charges.
Pro
Secured loans are often easier to access than unsecured personal loans, which is particularly beneficial to self-employed people who may otherwise find it difficult to access credit.
Pro
It gives you an alternative means of borrowing money if you’d prefer not to take out an unsecured loan or additional credit card.
Con
You can remain on your existing mortgage deal without remortgaging, so there won’t be any early repayment charges.
Con
If you move home, both mortgages need to be paid off in their entirety.
Con
The interest rate of a second charge mortgage will almost certainly be higher than that of your current mortgage.
Who can take out a second charge mortgage?
A second charge mortgage is only available if you currently have a mortgage on your home. However, you can take out a second charge mortgage even if you don’t live in the property, such as in the case with a buy-to-let mortgage on a property you rent out.
Before you take out a second charge mortgage, your current mortgage lender needs to approve the application. This requires giving evidence that you can pay both mortgages without any difficulty.
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Second Charge Mortgages in Worcestershire and Kent
Droitwich Office
5 Saltway, Droitwich, Worcestershire, WR9 8LB 01905 779697
Sevenoaks Office
46 Holly Bush Lane, Sevenoaks, Kent, TN13 3TL 01732 926255
