Find your own mortgage with a little (free) help from Teito!
A second charge mortgage is a secured loan available for homeowners.
Secured against your home, with a second charge mortgage, you continue to pay your original mortgage - also known as a 'first charge mortgage' - as they are maintained separately. If you fail to keep up with repayments and your home is repossessed, the first charge mortgage will take precedence in being repaid from the sale proceeds, before paying the second charge mortgage.
Our team of experienced advisors have helped many people to get a great deal on their second charge mortgage. As a whole-of-market broker, we work with many lenders to get you the best rates possible.
To get started, complete our simple online form today, or keep reading to learn more.
Your second charge mortgage lender will assess the value of your property and secure the mortgage against your home as security.
A few points to make:
They can be speedy to arrange, depending on the circumstances, which can help if you need a rapid cash injection.
Second charge mortgages may work out cheaper than remortgaging, especially if you have favourable rates and will incur a fee for early repayment on your existing mortgage. You may find that for self-employed people, the terms are more flexible than alternative finance options, and they can also help to rebuild your credit rating.
The amount you will be able to borrow with a second charge mortgage will depend on a range of criteria. All lenders will have different eligibility and affordability requirements, but generally, they will assess:
While it is not impossible to get a second charge mortgage with bad credit, it is less straightforward.
You will actually find that by managing a second charge mortgage successfully that your credit rating improves. We have helped many people with bad credit to get a second charge mortgage. There are many reasons why you might have bad credit, ranging from missing a few payments through to IVAs and bankruptcy.
There are a few things you can do to improve your score before making an application; however, it can take a few months before you see real improvements to your credit rating.
Your income will play a role in the lender assessment of your second charge mortgage application.
If you have a stable income, you will be deemed as lower risk in comparison to someone whose income varies, for example, if they are self-employed or are paid mostly in commission. Self-employed people are generally required to provide a minimum of three years of trading history; however, some lenders will consider less.
Our advisors can help to recommend the best lenders, depending on your situation.
Being retired doesn't preclude you from getting a second charge mortgage.
Assuming the lender is confident in your ability to make repayments long term, you are likely to be eligible. While some lenders have a maximum applicant age limit of 75, other lenders go beyond 80.
Generally, lenders for second charge mortgage will require ownership for a minimum of six months before agreeing to a loan.
If you have minimal equity in the property, as is typical for many first-time buyers, you may be deemed as higher risk. Get in touch with one of our advisors to learn more.
While it is more complicated to secure a second charge mortgage against a non-standard property, it is not impossible.
Non-standard properties, for example, those with thatched roofs or listed buildings, are more niche and therefore are deemed more challenging to sell. As a second charge mortgage is secured against the property, non-standard properties are seen as higher risk, meaning there is a reduced pool of lenders available.
Our advisors can help you to find the perfect lender for your non-standard property.
You may find it more challenging to get a second charge mortgage on a property without a mortgage or secured loan already against it.
This is because they tend to be secured over the top of a first charge mortgage. If this is your situation, let our advisors help.
Second charge mortgages are used for a range of purposes.
Many homeowners with debt can use a second charge mortgage to consolidate their debt, which can provide a lower interest rate than unsecured loans. You may find that if you have bad credit you are offered a less favourable rate, with a reduced Loan to Value offer.
Home improvement activity is the other main reason why people go for second charge mortgages. If you are planning an extension or garage conversion, for example, you may decide to get a second charge mortgage to fund the development.
It is possible to get a second charge mortgage on a buy-to-let property.
However, the pool of willing lenders is reduced as buy-to-let properties are seen as riskier. For more information, get in touch with one of our team who can help you to find the perfect lender.
As a second charge mortgage is secured on your property, if you fail to make repayments, there is a risk that your home will be repossessed.
A second charge mortgage comes second in terms of the order of payment if this happens. This means that your mortgage will be paid from the proceeds of the sale first, with the second charge mortgage being paid second.
If there is not enough cash generated from the sale to cover both mortgages, you may have to enter into an IVA or declare yourself as bankrupt.
There are a few alternatives to consider when deciding on a second charge mortgage. The obvious option is to remortgage. You might be able to find a better mortgage deal that frees up the cash you need without entering into a new loan agreement.
You could also consider a personal loan or 0% credit card depending on the level of spend, which will not be secured on your property.
Our team of advisors are waiting to hear from you, complete our simple form today to get started.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.