A second charge – otherwise known as a "second mortgage" or “second charge mortgage” is a mortgage that’s secured against a property which already has a mortgage on it.
This second mortgage is entirely separate from your original or "first” mortgage. It’s a completely different product with a new lender. This means that the rate, period of time you have that rate and the overall mortgage term may be different.
You need your existing lender’s permission in order to secure a second charge on your property.
The second mortgage rates available to you will likely be higher than the rate for your first mortgage, as second charge lenders are often taking on more risk; if were you unable to keep up your mortgage payments and your property was repossessed, the first charge lender would be paid before the second charge lender. This means that, if there wasn’t enough equity in the property to pay back both lenders, the second mortgage lender could lose money.
Who Could Benefit from a Second Charge?
You might find a second charge suitable if you:
- Want to avoid remortgaging because you’re still on your introductory deal and your mortgage has ERCs (early repayment charges)
- Have a great deal on your current mortgage that you don’t want to lose by remortgaging
- Don’t want to extend the term of your current mortgage
- Aren’t able to get a further advance from your existing lender
- Have found that your credit rating has gone down since taking out your first mortgage
- Are struggling to obtain some form of unsecured borrowing
We will be able to put you in contact with an advisor to assist you in securing a second loan if this is deemed the most beneficial option for you.