If you’re a homeowner looking to access additional funds, a Second Charge Mortgage might be a good solution for you. Also known as a secured loan, a second charge mortgage allows you to borrow against the equity in your property without needing to change your primary mortgage. Here is everything you need to know about second charge mortgages and how we can help you.
What is a Second Charge Mortgage?
A Second Charge Mortgage is an additional loan taken out on top of your existing mortgage. Unlike remortgaging, where you switch your current mortgage to a new one, a second charge mortgage runs alongside your existing mortgage. This means your current mortgage retains the first legal charge on your property, while the second charge mortgage adds an additional legal charge.
To qualify for a second charge mortgage, you must already own a home, although you do not need to reside in it. This type of mortgage is typically used to unlock the equity in your property.
When Would You Use a Second Charge Mortgage?
Second Charge Mortgages are often sought to raise funds for specific purposes, such as:
- Major home repairs or renovations
- Home extensions
- Personal expenses like debt consolidation or significant purchases
They can serve as an alternative to extending your existing mortgage through a Further Advance or remortgaging to a new, larger mortgage.
Why Choose a Second Charge Mortgage?
In recent years, obtaining traditional mortgages has become more challenging, especially for self-employed individuals or those with variable incomes. Here are some compelling reasons to consider a second charge mortgage:
- Flexibility with Credit Scores: A second charge mortgage is often more accessible for those with lower credit scores compared to standard mortgages.
- Quick Access to Funds: These mortgages can be processed quickly, with completions possible in as little as three weeks, making them ideal for urgent projects.
- Avoiding High Costs: By opting for a second charge mortgage, you can avoid early repayment charges associated with remortgaging, which can run into thousands of pounds.
- Retaining Low Interest Rates: If your existing mortgage has a low interest rate, remortgaging might lead you to lose that advantage. A second charge allows you to keep your existing mortgage intact while accessing funds.
- Interest-Only Options: If your first mortgage is interest-only, switching to a repayment mortgage through remortgaging could increase your monthly payments. A second charge allows you to maintain your current arrangement.
The Fine Details
- Secured Against Equity: A second charge mortgage is secured against the equity in your property, meaning your home is at risk if payments are not maintained.
- Borrowing Limits: You can typically borrow up to £2 million, with loan-to-value ratios (LTV) of up to 95%.
- Useful for Small Businesses: This option is particularly beneficial for those with fluctuating incomes or self-employed individuals.
Partnering with Local Experts
At Ingrid Cairns & Associates, we can refer you to trusted local companies that specialise in second charge mortgages. Our partners are well-equipped to help you understand the process and find a solution that meets your financial needs.
If you’re considering a second charge mortgage to manage your finances or fund your home improvements, don’t hesitate to reach out to us for more information.We’re here to guide you through the options available and help you make an informed decision.
Your Home may be repossessed if you do not keep up repayments on your mortgage. Ingrid Cairns & Associates Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. A Fee May Be Charged For Mortgage Advice. The Exact Amount Will Depend On Your Circumstances But It Will Not Exceed £495.
