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Second charge mortgages

  • There are 1,000 reasons you might want a second charge mortgage
  • Unlock equity for debt consolidation, home improvements, school fees and more
  • Residential, buy-to-let and commercial properties qualify as ‘security’

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    Free up cash without compromising your existing ‘first charge’ mortgage

    A second charge mortgage you may also know as a secured loan. It’s a great option if you want to raise extra cash whilst leaving your current mortgage in place. Lenders are more flexible, both on what you want the money for and the lending criteria.

    Our approach at Mortgage Quest is to look at your individual circumstances. This will include the all-important value of your current home. We’ll then find a flexible second charge provider willing to lend against that value.

    The lender will then use your existing property as security on a second charge loan. Yes, this does mean you will have two mortgages secured against your home. But we’ll work with you to set the right term for the second mortgage.


    020 8421 7998

    What can I use a second charge mortgage for?

    You might be looking to borrow for any number of reasons. You may want to consolidate debt or fund strategic, significant home improvements. Or, you might be looking to invest and need a buy-to-let mortgage deposit.

    Many homeowners immediately think “remortgage” when they want to release equity. For many reasons, paying off your current mortgage may not be the best option for you.

    You may have a great interest rate on your main mortgage and not want to sacrifice it. Or remortgaging may force you into paying an expensive early redemption charge.

    But—more importantly—for some borrowers, remortgaging might not even be an option!

    Due to tightening lending criteria of lenders, you might not be able to take out a new mortgage. In such cases, a second charge mortgage might prove far more fitting for your purpose.

    You can take out a second charge mortgage for all sorts of purposes. Some of the most common include:

    • Consolidate debts/outgoings into one monthly payment
    • Raise finance without having to remortgage
    • Exit for an existing bridging facility
    • Business needs extra funding
    • Borrow £5,000 to £500,000
    • Buy-to-let property purchase
    • Funding home improvements
    • Have a bad credit rating
    • A new car or wedding
    • Raise capital quickly
    • Paying school fees
    • Transfer of equity
    • Paying a tax bill
    • Lease extension

    Second Charge FAQs

    Homeowners always have questions about second mortgages and equity release. Here are a few popular examples, answered. If the answer you want isn’t here, call one of our expert advisors on: 0208 421 7998

    Who can apply for a second charge mortgage?

    Any homeowner with at least 15% equity in their home can apply for a second charge loan. Second charge providers often offer more flexible terms than a first charge mortgage lender. Besides that, they’ll assess applications in a similar way to standard first charge mortgages.

    What are the main benefits of a second charge mortgage?

    Second charge mortgages are generally cheaper and more competitive than unsecured loans. Borrowers who have a poor credit score also find it less difficult to get the extra funding. The amount you can borrow is much more when using a normal unsecured loan (which is around £25,000).

    What is the repayment term on a second charge mortgage?

    The repayment term for a second charge loan is akin to a standard mortgage, anywhere from 5 to 30 years.

    Do second charge mortgages carry more risk than an unsecured loan?

    A main reason second charge loans are cheaper than unsecured loans is they carry less risk to lenders. This is because the bank has a 2nd charge registered against your property as security. That means that the lender can apply to reposess your property if you fail to meet the loan terms of the second charge.

    Can I get an interest-only second charge mortgage?

    Just like a standard mortgage, lenders offer interest-only options. Their availability will depend on the borrower’s personal and financial circumstances.

    How much can I borrow on a second charge mortgage?

    Like standard mortgages, the amount you can borrow will depend on:

    • Your mortgage affordability
    • Your credit score and history
    • The loan-to-value ratio you need

    The loan-to-value (LTV) determines how much you can borrow. The lower the LTV, the greater the equity you can borrow against.

    It’s important to understand the equity your existing mortgage gives you. First, take the latest valuation of your property. Then, deduct the amount you still owe on your mortgage.

    The balance is the equity you can use for a second charge mortgage. Although, the exact figure would be subject to your income and credit rating.

    What types of property can I use as security?

    You can use the following types of security for a second charge loan:

    • Residential properties (up to 95%)
    • Buy-to-let properties (up to 85%)
    • Commercial properties (up to 80%)

    How long will a second charge mortgage application take to complete?

    The average turnaround time for a second charge mortgage is two to three weeks. That’s from the initial enquiry to mortgage completion.

    Second charge mortgage advice

    We can help you with everything you need to know before considering a second charge mortgage. Before you apply, consider the following points.

    Your home is at risk from repossession if you don’t keep up the repayments. That’s the same as with any mortgage.

    If you sell your property, the first charge (existing) mortgage gets paid off first. Any equity leftover goes towards clearing the second charge loan.

    Think about the amount you’re borrowing. If you need to borrow less than £10,000, is a second charge worth it? It may be more cost-effective to apply for an unsecured loan, such as a personal loan

    If you have any other questions or know enough to proceed, call our team of experts on 020 8421 7998 or enquire here.