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  • Second Charge Mortgages

Second Charge Mortgages

A Second Charge mortgage is, as the name suggests, a separate and additional mortgage to the homeowner’s main (or first) mortgage.

Second charge mortgages (sometimes known as ‘Homeowner Loans’) are loans which are secured against the borrower’s residential property, and as such, are available only to homeowners. In common with remortgages, second charge mortgages are sometimes used by homeowners to raise money.

When considering a second (‘further’) advance, the lender will take into account the value of the borrower’s home, less any mortgage owed on it. The difference between the two amounts is known as ‘equity’ and provides the lender with security against the loan. If for example, the home is estimated to be worth £300,000 and the amount remaining to be paid on the mortgage is £100,000, the equity is £200,000. In addition to the amount of equity that’s available, the lender will consider the borrowers’ ability to service both mortgages if interest rates were to rise.

By taking a second mortgage, the homeowner will have two mortgages on his or her home. In common with a first mortgage, the borrower’s home will be at risk if he or she fails to keep up the mortgage payments.

When the property is sold, or the homeowner moves to a new home, the amount owing on the first mortgage must be repaid in full before anything is paid off the second mortgage.

Generally speaking, lenders charge a higher rate of interest on second charge mortgages than they do on first or main mortgages. The rate of interest (which may be fixed or variable) can also depend on the size and term of the loan, the homeowner’s credit rating and the amount of equity that exists in the home.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the repayments.

Second Charge Mortgages are by referral only.

Second Charge Mortgages

A Second Charge mortgage is, as the name suggests, a separate and additional mortgage to the homeowner’s main (or first) mortgage.

Second charge mortgages (sometimes known as ‘Homeowner Loans’) are loans which are secured against the borrower’s residential property, and as such, are available only to homeowners. In common with remortgages, second charge mortgages are sometimes used by homeowners to raise money.

When considering a second (‘further’) advance, the lender will take into account the value of the borrower’s home, less any mortgage owed on it. The difference between the two amounts is known as ‘equity’ and provides the lender with security against the loan. If for example, the home is estimated to be worth £300,000 and the amount remaining to be paid on the mortgage is £100,000, the equity is £200,000. In addition to the amount of equity that’s available, the lender will consider the borrowers’ ability to service both mortgages if interest rates were to rise.

By taking a second mortgage, the homeowner will have two mortgages on his or her home. In common with a first mortgage, the borrower’s home will be at risk if he or she fails to keep up the mortgage payments.

When the property is sold, or the homeowner moves to a new home, the amount owing on the first mortgage must be repaid in full before anything is paid off the second mortgage.

Generally speaking, lenders charge a higher rate of interest on second charge mortgages than they do on first or main mortgages. The rate of interest (which may be fixed or variable) can also depend on the size and term of the loan, the homeowner’s credit rating and the amount of equity that exists in the home.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the repayments.

Second Charge Mortgages are by referral only.

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Company address: Hartley Hepworth Financial Planning Ltd, Howbrook Farm, Howbrook Lane, Sheffield, South Yorkshire, S35 7EH T: 0114 2848808 E: info@hartleyhepworth.com

Hartley Hepworth Financial Planning Ltd is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority.

Hartley Hepworth Financial Planning Ltd is registered in England and Wales, Company No: 04675658. Registered Address: Howbrook Farm Howbrook Lane, Howbrook Wortley, Sheffield, South Yorkshire, S35 7EH

The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

Approver Quilter Financial Services Limited and Quilter Mortgage Planning Limited.

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