The Best 2nd Charge Mortgage in 2022

The Best 2nd Charge Mortgage in 2022

First and foremost know that when taking out a second charge mortgage allows you to use your home to borrow more money, for example to cover the cost of home improvements.

Don’t also forget that 2nd Charge Mortgage is good and always useful, and of course so many people out there are using it and all happy with it.

Another thing is that it can be a useful alternative to remortgaging to access additional borrowing, and especially if you will face penalties to switch away from your current mortgage.

So therefore, incase you’re a homeowner, you of course may be able to borrow more money via a second mortgage, also known as a second charge mortgage

The Best 2nd Charge Mortgage in 2022

What is a second charge mortgage?

A second charge mortgage is a secured loan that uses the capital (or equity) in your home as collateral. In other words, it’s based on the difference between the value of the property and the amount you owe on your first mortgage.

A second mortgage is completely separate to your original mortgage, and can be a good way to access extra funds without remortgaging. However, it will mean you have two mortgages to pay off on the property.

If you become unable to pay either your first or your second mortgage, your home could be repossessed as a result.

Why might I consider a second mortgage?

You might benefit from taking out a second mortgage if:

  • You’ll face big early repayment charges or penalties for switching away from your current mortgage deal
  • You’re on a particularly good deal already, and remortgaging would mean paying a new higher interest rate across the whole borrowing amount

Can I get a second mortgage?

Only homeowners can take out second charge mortgages, but you don’t have to live in the property to apply. Second mortgages can also be taken out on second homes and buy-to-let flats and houses.  Either way, you’ll need some capital built up in the property to qualify.

You can work out how much capital you have by deducting the amount you owe on your first mortgage from the value of your home. Say your home is worth £300,000, and your existing mortgage is for £100,000, your capital is £200,000.

To take out a second charge mortgage, you’ll also need to get permission from your existing mortgage lender, and to prove to the second mortgage lender that you can afford the repayments on both loans.

How much can I borrow on a second charge mortgage?

The amount you can borrow on a second mortgage will depend on your income, and the amount of equity (or capital) you have in your property.

So now let’s take for example, you have a high income and capital of £100,000, a second mortgage lender might agree to let you borrow the full £100,000, although some will cap the maximum amount at 75% or 80% of the equity available anytime.

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