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Second Charge Mortgage

Providing individual mortgage advice; unique to you

What is a second charge loan/mortgage? 

A second charge mortgage is a loan secured against your property using the equity available. The legal title will be registered after your primary mortgage lender. It can be secured against residential, buy-to-let and commercial properties. Lots of businesses & individuals are taking up the opportunity of having a 2nd charge loan, because it’s simple to set up and manage. 

How much can I borrow?

The lender will look into your current loan to value and determine how much equity you have in the property, based both on your mortgage outstanding and the value. If for example your property is valued at £400,000 and you have a mortgage outstanding of £100,000, the lender will allow you to borrow up to £300,000 depending on the result of an affordability assessment. Typically second charge lenders will only allow for a maximum of 85% LTV for Buy to lets & 90% LTV for residential mortgages; this would mean as per the example a maximum additional loan of £240k & £260k respectively.   

Why would I use a second charge? 

Generally, when you need to release some of your funds a second charge loan will be taken out. You’ll also find however, this versatile loan tool can serve several other valuable options. For example:

  • When you need to release funds and the interest rate on your primary mortgage is too good to change, a second charge allows you to release funds and keep the same low interest rate. 
  • If you’re locked into your current mortgage with a huge early repayment penalty, opting for a second charge may be ideal.
  • If you have bad credit, second charge lenders tend to be more flexible when accepting applicants.
  • When you have debts you wish to clear and the high street can’t help, a second charge can.

Special Features attached to second charges

There’s one word used to describe this type of loan perfectly - ‘Flexible’. And the great thing is this flexibility can help tailor individual requirements to the perfect loan Package. Firstly, Lending is based on disposable income as opposed to multiples of income such as the high street. Typically the high street will lend a maximum of 5x income but with second charges it can be stretched to an impressive 9x income. What’s more:

  • Applicants can be added to the second charge mortgage to help with affordability without being added to the primary mortgage not incurring stamp duty by doing so. 
  • The loan can be paid back without incurring any early repayment charges 
  • You have the option of interest only or capital repayments 
  • Mortgage terms can be as long as 30 years

Are second charge mortgages regulated?

Second charge mortgages are similar to that of first charge mortgages, where a second charge is secured against your residential home it will be considered regulated except in the instance where funds are being raised for business purposes. If the second charge is being raised against a BTL property, different rules will apply depending on the circumstance, see our BTL page with further details regarding this.  

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Details submitted through this form are confidential. We will process any personal information collected in this form in accordance with our Privacy notice. The information therein is used only to contact you to discuss the areas you've expressed an interest in. Please note the contents of this form is sent via email and therefore may not be secure.