Second Charge Mortgages:
What You Need to Know

Second Charge Mortgages: What You Need to Know

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Understanding Second Charge Mortgages

If you need additional funds for home improvements, debt consolidation, or other large expenses, a second charge mortgage may be an option. This type of secured loan allows you to borrow against the equity in your property without changing your existing mortgage.Also known as a homeowner loan or second mortgage, this loan is secured against your home and runs alongside your current mortgage.

Mortgage One does not advise on or arrange second charge mortgages.
Where appropriate, we may refer you to a trusted third-party provider who specialises in this area.

What Is a Second Charge Mortgage?

A second charge mortgage enables you to take out an additional loan secured against your property, while keeping your first mortgage in place. If you fail to make repayments, both your first and second charge lenders have the right to repossess the property — with the first lender taking priority in repayment.

Common uses include:

• Home renovations

• Large one-off purchases

• Debt consolidation

This type of borrowing can be useful when remortgaging would trigger early repayment charges, or when your existing mortgage rate is particularly competitive.

Eligibility Criteria

Each lender has specific criteria, but typically they will assess:

• Equity available in your property

• Your income and outgoings

• Employment status

• Credit history and score

• Property type and value

How Loan-to-Value (LTV) can Affect Borrowing

The LTV combines your current mortgage and any new borrowing against the property. For instance:

• Property value: £300,000

• Outstanding mortgage: £120,000

• Equity: £180,000

• If a lender offers up to 75% LTV, total borrowing could be up to £225,000 — including the first and second charge combined.

How a Second Charge Is Registered

• Consent from your current lender: The first mortgage lender must agree to a second charge being added.

• Valuation: A new property valuation may be required to assess available equity.

Remortgaging with a Second Charge in Place

If you have a second charge mortgage and later want to remortgage, this can add complexity. Some lenders may have specific criteria, or request the second charge be cleared or subordinated. A specialist second charge mortgage adviser can guide you on how to manage this.

Advantages and Disadvantages of Second Charge Mortgages

Advantages:

• You keep your original mortgage terms and rate

• May avoid early repayment charges

• Can offer larger loan amounts than unsecured credit

Disadvantages:

• Higher interest rates than first charge mortgages

• Consent required from your current lender

• Two sets of mortgage payments to manage

Alternatives to Consider

Before proceeding, it’s worth exploring other borrowing options:

• Remortgaging: Consolidate borrowing into one mortgage if suitable

• Further advance: Additional borrowing through your existing lender

• Unsecured loan: May be suitable for smaller sums without securing against your home

Interest Rates on Second Charge Mortgages

Rates are usually higher than those on first mortgages due to the increased risk for lenders. Your rate will depend on the lender’s assessment of your LTV, credit profile, and financial situation. Mortgage One does not advise on second charge mortgage rates and cannot guarantee access to specific rates.

Which Lenders Offer Second Charge Mortgages?

Second charge mortgages are typically provided by specialist lenders rather than high street banks. If this type of finance is appropriate for your needs, we can refer you to a trusted third-party adviser who specialises in second charge lending.

Get in Touch

Second charge mortgages are a complex financial product and are not suitable for everyone. Mortgage One does not provide advice on second charge mortgages, but we can refer you to a qualified specialist if this type of borrowing may be appropriate.