Second Charge Mortgage Guide | Everything You Need to Know
Are you considering borrowing more money but don’t want to give up your current mortgage deal? A second charge mortgage, also known as a second mortgage or secured loan, could be the solution.
With rising interest rates and homeowners often locked into competitive fixed-rate deals, many people are turning to second charge mortgages as a way to access extra funds without disturbing their existing mortgage. Whether you’re looking to consolidate debt, fund home improvements, invest in a buy-to-let property, or cover a major expense, a second charge mortgage allows you to release equity while keeping your original mortgage in place.
In this guide, we’ll explain exactly how second charge mortgages work, the key benefits and risks, who they’re suitable for, and the steps you’ll need to take to apply. By the end, you’ll have a clear understanding of whether a second charge mortgage is the right financial move for you.
What Is a Second Charge Mortgage?
A Second Charge Mortgage is a type of secured loan that is taken out in addition to your existing mortgage. It allows you to borrow money against the equity you have built up in your home, without replacing your current mortgage.
Your first mortgage remains in place, and the second charge sits behind it, hence the name “second charge”. If you sold your home, the first mortgage would be repaid first, and the second charge loan would be repaid after that.
How Does It Work?
When you apply for a second charge mortgage, a lender assesses the amount of equity in your property. Equity is the difference between your property’s current value and what you still owe on your mortgage.
For example:
Home value: £300,000
Outstanding mortgage: £200,000
Equity available: £100,000
You may be able to borrow a portion of that £100,000 equity through a second charge loan, depending on your income, credit profile, and lender criteria.
What’s the Difference Between a Second Charge Mortgage and Remortgaging?
| Feature | Second Charge Mortgage | Remortgaging |
|---|---|---|
| Replaces existing mortgage? | No, it’s in addition | Yes, replaces current mortgage |
| Good if you’re on a good deal with your current lender? | ✅ Yes | ❌ Not ideal if early repayment charges apply |
| Useful if you have poor credit now but didn’t when you got your first mortgage? | ✅ Yes | ❌ May end up on worse terms overall |
| Flexibility for complex income or self-employed? | ✅ Often more flexible | ❌ May be harder with mainstream lenders |
| Access to equity without affecting first mortgage? | ✅ Yes | ❌ Not possible, as you refinance everything |
In Summary:
Second charge mortgages are ideal if you want to borrow more without disturbing your current mortgage.
Remortgaging may be better if you’re coming to the end of your deal and can get a good new rate.
When Should You Choose a Second Charge Mortgage Instead of Remortgaging?
Choosing a second charge mortgage could be the better option if:
| Scenario | Second Charge Mortgage | Remortgaging |
|---|---|---|
| You’re on a low fixed rate and don’t want to lose it | ✅ Ideal – lets you borrow more without changing your current deal | ❌ Not ideal – remortgaging would replace your low rate |
| Your current mortgage has early repayment charges (ERCs) | ✅ Avoids ERCs by leaving the first mortgage untouched | ❌ May trigger expensive ERCs if you remortgage |
| You’ve had a change in credit score or circumstances | ✅ May still be accepted as second charge lenders are more flexible | ❌ Could result in a worse deal overall if your credit has dropped |
| You only need to borrow a specific amount | ✅ Only borrow what you need, separately from your main mortgage | ❌ You’d need to refinance the entire mortgage, which may not be efficient |
| You’re self-employed or have complex income | ✅ More specialist lenders available with flexible underwriting | ❌ May struggle to meet standard mortgage criteria |
| Your current lender won’t offer additional borrowing | ✅ Gives you an alternative way to access equity | ❌ You’re limited to your current lender’s offering or must switch completely |
| You need funds quickly | ✅ Often faster to arrange than full remortgaging | ❌ Can take longer due to full remortgage process |
| You want to consolidate debt separately from your main mortgage | ✅ Keeps debt consolidation separate, with a clear repayment structure | ❌ May extend the debt over the full mortgage term, costing more in interest |
Common Uses for Second Charge Mortgages
Home improvements (extensions, renovations, upgrades)
Debt consolidation (combine multiple debts into one payment)
Paying for education fees
Helping children with a deposit
Supporting business investments
Large one-off purchases or investments
What Are the Risks?
As with any secured loan, your home is at risk if you fail to keep up with repayments. It’s important to:
Consider affordability carefully
Understand the interest rate and term of the loan
Check if the total cost is higher than other options (e.g., unsecured loans or remortgaging)
How Much Can You Borrow with a Second Charge Mortgage?
This depends on:
Your equity
Your income and affordability
Your credit score
Lender criteria
Typically, second charge loans start from £10,000 and can go up to £1 million or more, depending on your situation.
What’s the Process to Apply?
Speak to a mortgage adviser who is qualified in second charge mortgages
Review your current mortgage details and equity position
Assess your needs and affordability
Compare products across multiple lenders
Submit the application with supporting documents
Property valuation and underwriting
Legal checks and completion
Pros and Cons at a Glance
| Pros | Cons |
|---|
| ✅ Keep your existing mortgage deal – You don’t need to disturb a low interest rate or pay early repayment charges on your current mortgage. | ❌ Two mortgage payments – You’ll have to manage two monthly payments: your original mortgage and the second charge loan. |
| ✅ Access equity without remortgaging – Ideal if your current lender won’t offer further borrowing or if remortgaging isn’t suitable. | ❌ Your home is at risk – Like any secured loan, your property could be repossessed if you fail to repay. |
| ✅ Flexible lending criteria – Second charge lenders often consider complex income, self-employed, or credit-impaired applicants. | ❌ Higher interest rates – Second charge loans can carry higher rates than first mortgages, depending on your credit profile. |
| ✅ Useful for large or specific borrowing needs – Perfect for home improvements, debt consolidation, or school fees. | ❌ Long-term cost – If borrowed over a long term, the total interest paid could be high. |
| ✅ Faster approval in some cases – Often a quicker route than remortgaging, especially if time-sensitive. | ❌ Added complexity – More paperwork and legal checks are involved, and not all brokers advise on them. |
Is a Second Charge Mortgage Right for You?
Second charge mortgages aren’t right for everyone – but in the right circumstances, they can be a very effective way to borrow.
They’re especially useful if:
You’re happy with your current mortgage and don’t want to lose the rate
You need to borrow a substantial amount
You’re not eligible to remortgage for a better deal
You have specific or complex borrowing needs
- It’s recommended that you speak with a mortgage broker.
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