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Representative Example: A secured loan of £31,000 payable over 7 years on a fixed rate of 9.83% for the first 5 years, followed by a variable rate, currently 9.69%, would require 60 monthly payments of £553.17 followed by 24 monthly payments of £552.39. The total amount repayable would be £46,447.56. This includes interest, an arrangement fee of £1,999 and a processing fee of £499. The overall cost for comparison is 13.1% APRC representative.
A first charge mortgage is a type of secured loan that is tied directly to a property. It is usually the primary mortgage on a home or property. The lender providing the mortgage holds the first legal claim (or “charge”) over the property if the borrower fails to repay the mortgage.
Most people encounter a first charge mortgage when they purchase a home. The lender registers a legal charge against the property with the Land Registry, giving them the right to reclaim the outstanding balance by repossessing and selling the property if the borrower defaults.
First charge mortgages typically involve larger borrowing amounts and longer repayment periods, often ranging from 10 to 35 years. The mortgage is repaid in regular monthly instalments that include both the borrowed amount and interest, unless it is an interest-only mortgage.
Please be aware: Our first charge mortgage products are available for remortgages and capital raising against unencumbered properties. We do not currently offer mortgages for property purchases.
First charge mortgages are most commonly used for purchasing property, but they can also be used for other major financial purposes where a property is used as security.
Common uses include:
• Remortgaging - replacing an existing mortgage with a new first charge mortgage, often to secure a better interest rate.
• Property improvements - funding major renovations or extensions that may increase the property’s value.
• Debt consolidation - combining multiple debts into a single secured mortgage with potentially lower monthly payments.
• Large personal expenses - such as funding education, major life events, or large purchases.
Because the mortgage is secured against property, lenders usually assess factors such as property value, income, credit history, and affordability before approving the mortgage.
Loans are available to eligible borrowers and are subject to credit score, lending criteria, and individual circumstances.
Because the lender is first in line to be repaid, any missed payments can lead to home repossession. Other major risks include negative equity, long-term debt, and steep early repayment charges.
Risk overview:
A first charge residential mortgage is typically used to purchase a property. In contrast, a second charge mortgage is an additional loan secured against the same property. In both cases, the property serves as collateral, meaning it can be used to recover the debt if the borrower fails to maintain repayments.
A second charge mortgage is another name for a loan secured against the equity in your property. These mortgages are taken out in addition to your first mortgage, hence “second charge”.
The amount you can borrow relies on the available equity that’s in your home. This is what’s left when you subtract what’s outstanding on your current mortgage, away from the value of your home.
Your home acts as a form of security for second charge lenders if you are ever unable to keep up with the monthly repayments. This therefore means if you don’t own a property, you are unable to take out this type of loan.
With a second charge mortgage you would essentially be borrowing a second line of money in addition to your current mortgage. Therefore, two mortgages would be secured against your property.
There are different factors to consider before taking out a first charge mortgage. Ultimately, it’s important to make sure the mortgage is affordable and suitable for your long-term financial situation. Borrowers should consider their income, future financial stability, and the potential impact of interest rate changes before committing to a mortgage secured against their home.
While first charge mortgages are a common way to finance property, they do carry some risks.
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Stephen Stone
2 years ago
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Greg Erasmus
3 years ago
When I contacted Central Trust I had a very strict deadline to make a payment. Jenny was extremely helpful and informative and got the process started straight away. The whole way through I was kept informed at every stage of my application and any hiccups was swiftly dealt with. I can't thank Jenny, Tara and Stephanie enough for their help and professional service. Highly recommend.
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3 years ago
I originally left a review that said I was not satisfied with the service provided, however after being in touch with Tara I felt she tried her best to get the answer we wanted. Unfortunately it didn't work out, but she left us feeling optimistic that we can go back in a couple of months time to try again. Thank you for doing your best to help!
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3 years ago
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6 years ago
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6 years ago
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6 years ago
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6 years ago
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Why take out a first charge mortgage?
First charge mortgages are most typically used for buying a home.
Because the lender has priority over the property, first charge mortgages generally offer lower interest rates compared to other forms of borrowing, such as personal loans or credit cards.
The mortgage is secured against the value of the property, reducing the lender’s risk. This can mean more affordable monthly payments and lower overall interest costs throughout the life of the mortgage.
First charge mortgages can be easier to obtain for borrowers with a strong credit history and reliable income. These mortgages allow buyers to spread the cost of purchasing a home over a longer period, helping to make home ownership more manageable and accessible.
What are the differences between a first charge and second charge mortgage?
A first charge residential mortgage is typically used to purchase a property. In contrast, a second charge mortgage is an additional loan secured against the same property. In both cases, the property serves as collateral, meaning it can be used to recover the debt if the borrower fails to maintain repayments.
A second charge mortgage is another name for a loan secured against the equity in your property. These mortgages are taken out in addition to your first mortgage, hence “second charge”.
How do I enquire about a first charge mortgage?
Enquire for a first charge mortgage, it is a straightforward process, which can be completed online by following our application process or by calling one of our qualified advisors using the number at the top of this page.
Our advisors will be able to discuss your enquiry and establish whether or not we can help secure the funds you need.
Are first charge mortgages a good idea?
First charge mortgages can be suitable in some situations, particularly for consolidating existing debt into a single loan that may offer lower interest rates or more manageable monthly repayments. However, because your home is used as security, it is important to carefully consider affordability and long-term costs.
If repayments are not maintained, your home could be at risk, so it should only be considered if you are confident you can sustain the new payment structure.
What is the downside to a first charge mortgage?
Because the mortgage is secured against your home, missing repayments could lead to the lender repossessing and selling the property to recover the debt. First charge mortgages usually last between 20 and 35 years, meaning borrowers need to be confident they can keep up with repayments over a long period. If the mortgage has a variable interest rate, monthly payments may increase if interest rates rise. If property values fall, you could end up owing more than your home is worth, which can make selling or remortgaging difficult.
Do I need a solicitor for a first charge mortgage?
You do not always need a solicitor for a first charge mortgage. In some cases, we will handle the legal work through an appointed legal firm as part of the process. Where required, a solicitor or licensed conveyancer may be instructed to ensure the charge is correctly registered and all legal aspects are completed properly.
Can a mortgage company refuse a first charge mortgage?
Yes. Lenders have a responsibility to lend responsibly, which includes protecting you from taking on debt that could put you at unnecessary risk. If a lender feels that approving a first charge mortgage or loan could leave them (and you) exposed — for example, if there isn't enough equity in the property to cover the loan safely — they're entitled to decline the application.
This most commonly comes up when someone is trying to borrow more than the available equity supports. Beyond equity, a lender may also decline based on affordability or credit history, as part of that same duty to look out for your best interests.
If you're unsure how much equity you have, you don't need to work this out alone. A lender can check this for you before you commit to an application.
Are first charge mortgages regulated?
Yes. In the UK, most residential mortgages — including both first charge mortgages and second charge (secured) loans — are regulated by the Financial Conduct Authority (FCA) as regulated mortgage contracts. This means lenders must follow FCA rules on responsible lending, including assessing affordability, treating customers fairly, and providing clear information before you commit to a loan.