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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 second charge mortgage is another name for a loan secured against your home. These loans are taken out in addition to your first mortgage, hence “second charge”.
A second charge mortgage is a loan that is secured against the equity in your property. These are often referred to as secured loans or homeowner loans.
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 mortgage, away from the value of your home.
Your home acts as a form of security for 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 second charge mortgages, you would essentially be borrowing a second line of money in addition to your current mortgage. Therefore, two loans would be secured against your property.
This type of loan may allow you to borrow money with a poor or bad credit history. But it’s important to remember that the interest rate may be higher if you have bad credit, and you should never borrow more money than you can afford to repay. Loans are also only available to eligible borrowers and are subject to credit score, lending criteria, and individual circumstances.
Whilst second charge mortgages are a good option for people with a good credit history, they can also be a solution for those people with poor or bad credit histories. If you have struggled with your credit in the past and have previously been declined by mortgage lenders it doesn’t mean that every lender will turn you down. Whilst some lenders may not be able to assist, due to the associated financial risk of a low credit score, we have helped many individuals with a poor credit profile, who have experienced financial setbacks, but are now back on track. We will do our very best to help you find a suitable loan that is affordable. For help with credit or debt issues, you can visit The Money Helper.
We consider all credit histories, including those that have:
Second charge mortgages can potentially allow you to borrow money at a lower interest rate, take out a larger loan or borrow money despite a poor credit score.
Firstly, like all loans, a borrower would be given immediate access to funds. Whereas if you were to begin gradually saving up, it would take you longer to raise the money.
Secondly, as second charge mortgage lenders use your property as security, you may be able to obtain a larger loan with lower interest rates in comparison to other types of borrowing. For example, with an unsecured loan where assets are not used as collateral, rates and monthly repayments tend to be higher.
Moreover, the criteria for second charge mortgages tends to be more flexible in comparison to other borrowing options, such as your credit history or your length of employment. This is because your property is used as security. With this being said, it does depend on your personal circumstances.
Lastly, with a second charge mortgage you may be able to access longer repayment periods. This means that you will be able to pay back the money over a longer period of time, which will decrease you monthly repayment costs. It is important to note that having a longer repayment period, will mean that you may end up paying more overall, as you will be paying the interest over the loan term.
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.
Interest rates will vary depending on your situation. Factors include how much you want to borrow, the repayment period, the affordability of the loan and your credit history.
Second charge mortgage rates vary lender to lender and in most cases your personal circumstances such as your credit score and income will determine the rate and loan term.
Second charge mortgage rates tend to be higher than the rate for your first mortgage, as the second mortgage lenders usually take more risk.
If you want to find out what rate you could get on a second charge mortgage, click enquire now to begin.
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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.
Edward Mawby
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!
Anglela Ferrante
3 years ago
What an absolute delight of a company. Following setback created by the mini budget, I was left in a predicament, central trust came to the rescue and provided an excellent swiftly process. I would highly recommend using them. I dealt with Jenny who couldn’t of been more proactive and helpful.
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6 years ago
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David Cutler
6 years ago
Mostly good, gave me the wrong return address for a form that needed a signature witness which meant the form was lost and I had to go through the hassle of finding a witness again. Asked me to send a settlement figure which they had already received from me and had acknowledged receipt. But on the whole much more efficient, faster and more communicative than the bank who I applied to borrow the money from.
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6 years ago
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6 years ago
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Why take out a second charge mortgage?
Using your home as security could help you borrow more money, get a lower interest rate, or even overcome a poor or bad credit history.
Second charge mortgages are a useful source of borrowing for many people, as they can be used for a variety of different purposes.
They can be used to fund home improvement projects, whether these are essential property repairs or bigger projects with the aim to enhance a property or to increase the property value.
Some people take out second mortgages to help consolidate their debts. It could be that someone has multiple debts that they have accumulated over a longer period of time, and they intend to combine them into one loan with a lower repayment cost. In doing so, it can help people understand their debt better as it helps simplify their monthly payments.
Or they can simply be used to raise funds for other purposes that an individual does not have the savings to cover at the time.
How do I enquire about a second charge mortgage?
Enquire for a second 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.
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”.
Are second charge mortgages a good idea?
Yes, if you are using it to consolidate debt or pay off other debt at a lower interest rate or with more affordable monthly repayments. Using the equity in your home to reduce your costs or overall debt can be a good idea, but only if you can afford the new repayments as your home will be at risk if you cannot.
Do I need a solicitor for a second charge mortgage?
No. A solicitor will not be required for a second charge mortgage application. However we would always recommend researching any loan thoroughly and making certain that it is comfortably affordable. Always budget responsibly, and ideally have a plan of action in case of financial difficulty.
Can a mortgage company refuse a second charge?
Yes. Your mortgage lender is allowed to refuse a second charge loan or mortgage against your property if they feel it would make them lose money on the sale if they should ever need to repossess it. Generally, this would only happen if you were trying to borrow more money than what was available in equity.
You should always make sure you have enough equity in a property before applying for a second charge mortgage or loan. However if you are unsure, the new lender should be able to check for you. It’s worth noting that a lender could also refuse a second charge on other grounds such as affordability and credit history.
Are second charge mortgages regulated?
Second charge mortgages are regulated by the FCA, however if someone bought an investment property and does not live in it, then it falls into the “non-regulated” category. Second mortgages raised against these types of properties would fall into this category.
What is the downside to a second mortgage?
All loans have risks if you do not repay them. Although second mortgages offer many benefits, they have the added risk of losing your home if you do not repay the loan.