Professional Mortgage Advice

What Are Second Charge Loans?

Second charge loans are a secured loan and are can also be called “second mortgages” or “homeowner loans”.

If you take out a second charge loan, it will mean you will have two separate mortgages on your home. Your primary mortgage will still take priority over a second charge loan.



How Does a Second Charge Loan Work?

A second charge mortgage can allow you to use any equity you may have in your home as security against another loan (equity is the value of your home less any mortgage owed).

A second charge loan works in a similarly to a primary mortgage. For example. When you sell a property on which you have a mortgage, you will have to pay off that mortgage using the money from the sale. Likewise, you will also need to pay off any second charge loan that is secured against that property.




What Is The Purpose Of A Second Charge Loan?

A second charge loan can often used as an alternative to a re-mortgage especially if you are faced with an early repayment charge.

Reasons for choosing a second charge loan:

  • It may be cheaper for you to take out a second charge mortgage rather than to remortgage.
  • Your credit score has reduced since taking out your first mortgage.
  • You may have had a change in circumstances which results in a higher interest rate on your mortgage.
  • You may be locked into a fixed rate mortgage with expensive Early Redemption Charges. A second charge is often a more attractive option.

A second charge loan can be used for home improvement or to consolidate debt or raise funds. The higher the equity in your property, the more money you may be able to borrow.




A second charge loan can be ideal for customers looking to raise capital by releasing equity from their existing property.



A second charge loan is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any debt secured on it.