Second charge lending
A second charge loan is an additional, secured loan that you can take out in addition to your main mortgage to raise further funds. The loan is taken out against your property and is often used as an alternative to remortgaging. The loan is repaid in monthly repayments dependent on your lenders mortgage rates – just like your main mortgage.
Second charge lending – things to consider
Whilst your circumstances are different to others, with any big financial decision, there are some general things to consider when applying to take out a second charge loan against your property:
- You will be paying back two separate amounts every month, your main mortgage and your new loan;
- A second charge mortgage is generally offered at lower interest rates than those offered by other non-secured loan providers.
- Second charge lenders are often more flexible and bespoke in comparison to high street loan providers, meaning that they will provide loans in situations where some standard lenders won’t. In addition to this, second charge mortgages tend to be approved quicker than standard mortgages.
An alternative to remortgaging
Second charge lending has become a popular alternative to remortgaging for homeowners and there are many scenarios where second charge loans may be more beneficial to you:
- If your mortgage is fixed or discounted and has a high early repayment charge, taking out a second loan may well work out cheaper than remortgaging your entire loan where you would have to pay the penalty.
- If your credit rating has fallen since you first secured your mortgage, the interest rate you are offered when seeking a remortgage is likely to rise or you may be declined facilities.
- Taking out a new, separate loan does not affect your current mortgage rate, meaning if your current rate is attractive there is no risk of losing this rate as you might when remortgaging.
- A separate second charge loan can be taken out over a different loan term to your main mortgage allowing you to budget effectively.
Making it easier to borrow more money without affecting your current mortgage
If you are considering taking out a second loan against your property to raise additional funds, our team of expert mortgage advisers can help.
Get in touch with us for independent advice on the best course of action for your situation, based on your individual circumstances. Just give us a call on 0800 138 5856 or fill out a contact form and let us do the rest, we guarantee to respond to all emails within 24 hours.
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