2nd charge mortgages can be a beneficial option for many homeowners who may be struggling with debt, mortgage repayments or high tax bills. 2nd charge mortgages can also be used for additional property investments or for making major home improvements.
However, as attractive as they may sound, 2nd charge mortgages should never be taken lightly. It's important to carefully consider all your options before applying for a 2nd charge mortgage.
Fortunately, The Lending Channel is here to help. We can guide you you through the full process of applying for a 2nd charge mortgage and give you expert advice on whether a 2nd charge mortgage is right for you.
Call our Perth office directly on 01738 583008 to find out more about 2nd charge mortgages, or read through the helpful information laid out below.
A 2nd charge mortgage, which is also known as a secured loan, is essentially an extra, or second loan, on top of an existing mortgage loan.
The term is used for any loan facility protected by assigning a portion of the free equity in your property to the lender.
As implied by the name, this means you’ll have two mortgages on your home simultaneously. This means you are not changing your mortgage loan type, you are simply paying two loans back at once, which can be helpful in some situations but also damaging if you cannot afford the two repayments over an extended time period.
Common reasons for seeking a 2nd loan include:
It’s absolutely crucial that you understand the terms associated with your 2nd charge mortgage. There are severe consequences if you cannot afford the costs involved. That’s why it’s vital to first discuss your circumstances with an experienced broker, like our specialist team here at The Lending Channel.
A married couple living in Cambridgeshire wanted to make some home improvements and needed £8,000 for this work. They also wanted to reduce their credit commitments if possible, as current monthly payments were £584. A County Court judgment (CCJ) for £5,080, which was registered against them three years earlier, was still unsatisfactory and needed to be cleared.
At an annual rate of 3.75% for two years, a loan from Optimum Credit was taken out over 20 years with monthly payments of £456. This reduced their monthly commitments by £128. The clients also received the £8,000 needed for the home improvements and managed to clear the CCJ.
As the loan is secured against the equity in your home, a 2nd charge loan can only be arranged if you already own your own home and have an existing mortgage in place, hence the name of a ‘second charge’.
Your eligibility is dependent on a range of factors, and the requirements will vary from lender to lender. Generally speaking, 2nd charge mortgages are seen as more risky investments by lenders. Therefore, you should be prepared for a more rigorous application process and stricter terms.
In our efforts to offer a simple and straightforward service, we ensure that you are made fully aware of any fees at the outset, and all enquiries are treated on a no-obligation basis. All loan fees are usually added to the net loan facility leaving you with no upfront charges to pay.
What is the Criteria For a 2nd Charge Mortgage
A Debt Consolidation Loan can reduce your monthly credit charges significantly, with a possible fall of as much as 50%. However, debt consolidation can affect your credit rating, depending on the option you choose, so it's crucial you seek expert advice beforehand.
We have a long, established history of providing financial solutions to clients who may face challenging circumstances, including Commercial Mortgages, Short-Term Finance Options and Specialised Buy-To-Let Mortgages. We can help even if you have a CCJ, Individual Voluntary Arrangements (IVA), existing debt management plan or adverse credit history, including default on a payment or Trust Deed.
If you have any questions, get in touch, we’d be happy to discuss everything with you. Call us now on 01738 583008 or complete the online enquiry to get the ball rolling.
If you are not a direct client looking for a lending solution, perhaps you are interested in introducing business to us? If you'd like to introduce us to a client, please call for more details or follow the Introducers Link.
The Lending Channel are brokers, not charge lenders. We use a representative panel of lenders to source suitable lending solutions and are fully authorised and regulated by the Financial Conduct Authority. Firm Registration no. 626787.
You reduce the monthly repayments considerably because you use a 2nd charge mortgage (a form of a secured loan) to consolidate your credit over a much more extended period than is possible with an unsecured loan. This also allows you to borrow a much higher amount than is typical with an unsecured loan.
Up to £2.5m on standard plans. Our loans are all subject to status, affordability and having sufficient equity in your property.
No. Unfortunately, our secured loans are all 2nd charge mortgages, which require a first mortgage charge to be in place.
Yes, quite possibly, but this will ultimately be determined by how much equity you have in your property.
No, we are a national loan broker based in Scotland who help clients all over the UK. We will compare loans for you and select the product that best suits your needs and criteria.
Yes, we are a small but growing family run business.
Typically, it will take anywhere between two and four weeks, provided the initial paperwork is returned quickly.
Usually, you will be charged a fee, and some lenders also set their own arrangement fees. All fees are typically added to the net loan facility, and there are no upfront charges.