Second charge mortgages- five things you should know


Second charge mortgages- five things you should know

Are you thinking about taking a second charge mortgage? People usually choose a second charge mortgage for various reasons. It might be for home improvements, debt consolidation, wedding expenses or paying for your child’s tuition etc.

However, let’s make sure you clearly understand what second charge mortgages are all about. A second charge mortgage or a loan is basically a secured loan taken against any equity you own on your home. It means that you will have two mortgages.

Many people consider taking a second charge loan when they are unwilling or unable to get a remortgaging loan with a competitive rate. While the right financial product greatly varies according to your personal circumstances, here are a few pointers to help you gauge if a second charge loan is what you need indeed.

1) If you don’t want to let go of a good rate

Let’s suppose you’re currently on a mortgage with a low rate. It’s natural that you’d want to raise capital without going through the hassle of changing your existing lender.  If remortgaging means that you will have to transfer your first charge loan onto a higher interest rate, then second charge loan might be the best option for you.

2) If you want to avoid early repayment fees

Some mortgage lenders may charge you a penalty for early repayment of your loan. In addition to it, if they are unwilling you grant you additional lending, it might be a sensible option for you to consider second charge loans.  For trying to get a remortgage will probably only increase your costs. However, it’s still much wiser to ask your mortgage broker for advice and give you recommendations based on your current financial numbers.

3) If you are self-employed

Quite often, it’s a daunting task to get your hands on an unsecured borrowing, say a personal loan, if you’re self-employed. During such circumstances, rather than struggling to borrow money from other places, you can opt for a second charge mortgage with your home as your security.

4) If you have a poor credit history

Needless to say, poor credit history will obstruct your chances of getting competitive deals at lower rates. In some instances, it may be wise to consider second charge loans instead of a remortgage. Why? It’s better to pay more interest on the excess amount you want to borrow rather than paying on an entire mortgage.

5) If you’re looking for ‘long term’

‘Long term’ is the keyword here. With second charge mortgages, you’ll be able to get a loan over a long period of time. This means that your monthly loan repayments will considerably come down. However, you should keep in mind that a longer repayment schedule translates to a higher payment in interest for you.

In addition to these, a second charge mortgage can be taken against your buy-to-let property as well. However, you should keep in mind that it does come with a penalty for early repayment. A broker can sort things out for you if you’re confused still.

At GPS Finance, we’ve been guiding hundreds of satisfied, happy customers and businesses to attain their financial goals. Our experts have extensive experience in securing the best financial products tailor-made for your situation. Help us help you! Send in your questions at


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  • 25 Feb, 2019
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