What is a second charge?
A separate, additional mortgage alongside your main (first) mortgage, secured against your property. Also called a Homeowner Loan.
Common uses
Often utilised to raise funds without replacing your current mortgage.
How lenders assess
They evaluate your property’s value minus your outstanding first mortgage to determine your equity, then assess if you can afford both mortgages, especially if interest rates increase.
Example
If your home is worth £300,000 and you owe £100,000 on your first mortgage, your equity is £200,000.
Repayment priority
When selling or relocating, the first mortgage is repaid in full before the second.
Pricing
Second charges usually have higher interest rates than first mortgages. Rates (fixed or variable) depend on the loan size, term, your credit profile, and available equity.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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