Second Charge Mortgage Guide | A second charge mortgage lets you borrow against the equity in your home while keeping your existing mortgage. It can help if you need extra funds but do not want to remortgage. This guide explains how second charge mortgages work, when they are useful, and what they cost.

What Is a Second Charge Mortgage?

A second charge mortgage is a secured loan on your property. It uses your home’s equity as security for extra borrowing. Your first mortgage stays in place without any changes. You repay your first mortgage and second charge loan separately each month.  A second charge mortgage is useful when you need extra funds but cannot or should not remortgage. It may suit you if your current rate is very low or if early repayment charges are high.

This option can help with home improvements, debt consolidation, or major financial needs. Always consider affordability, as missed payments put your home at risk. For more support, view our residential mortgage Guide page.

How a Second Charge Mortgage Works

You borrow a new loan secured against your existing property. Your first mortgage stays in place. Your second charge lender ranks behind your first lender.

Key points:

• You must have equity in your home.

• You must pass affordability and credit checks.

• You repay the loan over an agreed term.

• Your interest rate may be higher than your main mortgage.

• You will have two repayments each month.

Many lenders offer second charge mortgages between £10,000 and £500,000, depending on equity and income.  Most lenders allow borrowing up to 85 per cent loan-to-value, subject to checks.

Always use an FCA-registered mortgage broker to assess your options.

When a Second Charge Mortgage Is Most Useful

A second charge mortgage is most valuable when a remortgage is not suitable.

Common reasons:

• You have a low fixed rate on your current mortgage.

• You would face high early repayment charges if you remortgage.

• You have had recent credit issues and need a specialist lender.

• You want to borrow for home improvements or debt consolidation.

• Your income has changed, and a remortgage would reduce your options.

• You need funds quickly and want fast underwriting.

Borrowers often use second charge mortgages for home improvements, business costs, school fees, or clearing unsecured debts.

Eligibility for a Second Charge Mortgage

Most lenders consider:

• Your income and employment stability

• Your credit file

• Your property value and equity

• Your current mortgage balance

• Your total monthly commitments

Lenders check your debt-to-income level and future affordability. Borrowers with stable income and strong equity usually get better rates.

How Much You Can Borrow

Your equity and income determine the size of your loan.

For example:

• A home worth £300,000

• A first mortgage balance of £150,000

• Equity available: £150,000

A lender may allow borrowing up to £100,000 depending on your credit, income, and loan purpose.

Use our remortgage guide to compare borrowing methods.

Costs and Fees

Second charge mortgage costs vary.

Expect:

• Interest rates between 6 per cent and 12 per cent

• Lender arrangement fees

• Broker fees

• Legal fees

• Valuation fees

Rates may be higher than your main mortgage. This is because the lender holds a second charge, which carries higher risk. You must consider both repayments when budgeting. Missing payments can impact your credit score and increase the risk of repossession.

Pros of a Second Charge Mortgage

• You keep your existing mortgage

• You avoid early repayment charges

• You access funds without remortgaging

• You may borrow large amounts

• You may access specialist lenders

• You can use the loan for many purposes

Risks of a Second Charge Mortgage

• You risk losing your home if payments fail

• You may pay higher interest

• You will have two monthly payments

• Fees can increase total costs

• Your debt will increase over time

Check our [debt consolidation advice] page if considering consolidating debts.

Second Charge Mortgage vs Remortgage

Second Charge Mortgage May Suit You If	Remortgage May Suit You If
A remortgage triggers early repayment charges.	You want a single monthly payment.
You already have a very low mortgage rate.	You can secure a new low fixed rate.
Your income or credit issues limit options.	You want simple long-term repayment planning.
You need fast access to additional funds.	You want fewer fees and lower overall costs.

Use our remortgage guide for more comparison support.

Second Charge Mortgage for Buy-to-Let Properties

Second charge mortgages can be used on buy-to-let properties. Lenders assess rental income, property equity, and landlord experience. See our buy-to-let mortgage service for more details.

Applying for a Second Charge Mortgage

Your broker will:

1. Review your income and credit

2. Check your equity

3. Compare lenders

4. Confirm rates and fees

5. Submit your application

6. Liaise with solicitors

7. Complete the loan process

A typical second-charge mortgage completes within 1 to 4 weeks.

A second charge mortgage can help when you need funds, but must keep your current mortgage. It can be helpful in home improvements, debt consolidation, and major costs. Always compare this option with remortgaging and seek expert advice. An FCA-registered broker will assess your needs and secure the best deal for your situation.

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