A second charge mortgage is simply a type of loan which definitely can be secured against a property that already has an outstanding mortgage on it.
To look at it in another dimension, it means you could have both your normal mortgage (the first charge mortgage) and a second charge mortgage from a different lender on one property.
Second charge mortgages are one option for homeowners who are looking to borrow larger sums of money than are available on personal loans.
You can typically borrow from £10,000 to over £100,000 with a second charge mortgage, although the amount available to you would depend on the equity you own and your financial situation.
Confusingly, second charge mortgages are known by a host of different names too, such as homeowner loans, secured loans, and second mortgages.
What Exactly is a Second Charge Mortgage?
A second charge mortgage lets you turn some of your home equity into funds you can use for a variety of reasons.
And if you take out a second charge mortgage, also known as a second mortgage or a homeowner loan, the amount you can borrow is limited by the amount of equity you own in your property.
How the second charge mortgages work?
If you own a property with a mortgage, then you do not own the property outright. Instead, you hold a certain amount of house equity, which is the difference between the value of the home if you sold it and the size of your outstanding mortgage.
For example, if your home is worth £200,000 and you have £100,000 left to pay on your mortgage, you have £100,000 of equity.
So therefore the amount of equity you as a person own should increase over time as you repay your mortgage, that’s if you have a repayment mortgage and of course will also go up if your property increases in value.