Second Charge Mortgage Brokers
A second charge mortgage is a type of secured loan designed to enable property owners to access extra money without remortgaging or opting for an unsecured personal loan. Through our partners the expert advisers at Think Plutus can assist you in finding flexible mortgage providers who grant loans that are secured against the value of your property.
How do second charge mortgages work?
Second charge mortgages are an option when you are already paying off a mortgage but have equity in your property. The basic concept is that you secure a loan that is essentially a second mortgage against the value of your property. The "charge" part relates to the legal security against which your property is held.
Second charge mortgages are worth considering if:
- You don't wish to extend your current mortgage term.
- Your current mortgage has a high charge for early repayment.
- Your credit score has gone down since securing your first mortgage.
- You're having difficulty acquiring an unsecured loan.
- You need funds quickly to make a fast move.
- Your current lender isn't providing the funds you need.
It's important you understand that, because a second charge mortgage is secured against your property, that property could be forfeit if you fail to keep up with payments. Think Plutus can advise of the risks involved in second charge mortgages, and offer strategies to help protect your long-term security.
Reasons Why Second Charge
Second charge mortgages can start at just £10,000. While the upper limit is determined by the available equity in your property, as well as your capacity to afford repayments. There are many ways you can use the funds you unlock, such as:
- Paying school/university fees
- Undertaking home improvements
- Purchasing a new vehicle
- Paying for a family wedding
- Consolidating your debts
- Investing in your business
- Funding a buy-to-let property purchase
Can I get a second charge loan?
If you own a property with a minimum of 15% equity, the option to apply for a second charge mortgage is available to you. You may find that second charge lenders offer a more flexible lending criteria than most first charge mortgage lenders, but applications are broadly assessed in much the same way.
This means the key considerations will be the value of the property in question, its condition, and your own income and credit score.
How much can I borrow?
The amount you can borrow depends primarily on the equity in your property. Equity is the percentage of the property that you own outright. For example, if you purchased a house for £400,000 and have £100,000 left to pay on the mortgage, your equity stands at £300,000. The equity that you own in your home will increase with the overall value of the property.
Most second charge mortgages allow you to borrow a minimum of £10,000, but there are some that start as low as £1,000. The higher your equity, the higher the maximum amount you can borrow, though your income and credit score will need to be taken into account as well.
Second charge mortgage advice
With access to our partners, you will receive expert advice on everything you need to know about your options for a second charge mortgage. There are some crucial things you need to know when deciding whether a second charge mortgage is a good fit for you:
- Homeowners in need of extra funds often choose to remortgage. This involves transferring their existing mortgage debt to a new lender, unlocking additional funds against the equity you own. This is a good option, but there are some cases where a second charge mortgage is a better one, so it's important to seek advice.
- Repossession is a possibility, just as with your first mortgage, so you need to be confident that you can keep up with repayments.
- If you sell your property, the first charge mortgage must be fully cleared before anything goes towards paying off the second charge, and second charge lenders are likely to follow up on any shortfall.
- If your borrowing needs are less than £10,000, an unsecured product like a personal loan may be a better option.
For help on everything related to second charge mortgages, get in touch with the experts at Think Plutus. We are specialists in finding the best mortgage rates for buyers of every kind, and we will advise on the best way forward for your circumstances. Don't make big financial decisions without exploring all your options - a second charge mortgage could be the perfect thing for you, so explore it with the help of the experts.