Elevate can assist clients with a range of financial services, including mortgage advice. As part of our mortgage advice services, we can assist with second charge mortgages. Please speak with our team now for a tailored assessment and help with finding the right mortgage.
WHAT ARE SECOND CHARGE MORTGAGES?
When a homeowner takes out a second mortgage on their property, it is known as a second charge mortgage. The value of the mortgage can be up to the amount of equity the homeowner has in the property. For example, if the homeowner’s house is valued at £300,000 and they have £100,000 left to pay on their mortgage, the homeowner will have £200,000 equity. Therefore, as long as their overall financial circumstances allow it, they can take out a second charge mortgage up to the value of £200,000.
THE MAIN REASONS FOR CHOOSING A SECOND CHARGE MORTGAGE
A second charge mortgage is one way to generate capital for other projects and needs, such as home renovations or investment purposes. In addition, a second charge mortgage may be used to circumvent early repayment charges or higher rates of interest associated with remortgaging.
If you need clarification on whether a second charge mortgage is the right option for you, feel free to reach out to Elevate mortgage advisers for an evaluation.
WHAT ARE THE ALTERNATIVES TO A SECOND CHARGE MORTGAGE?
If you are considering a second charge mortgage to raise cash for home improvements, the alternative options are other common forms of credit, such as personal loans or using credit cards.
Another mortgage alternative to second charge mortgages is remortgaging.
ADVANTAGES AND DISADVANTAGES OF SECOND CHARGE MORTGAGES
Second charge mortgages can be a viable option for homeowners to raise capital. However, it's important to weigh the pros and cons.
Advantages include the ability to access larger amounts of funds than with a personal loan and the fact that they are less expensive than unsecured loans. While disadvantages might consist of higher interest rates and fees, as well as the property being repossessed if you default on your loan.
As experts in the field, our mortgage advisers can provide insight into the benefits and drawbacks of second charge mortgages and offer guidance on whether it's a suitable option for a particular homeowner's situation.
ELIGIBILITY CRITERIA FOR SECOND CHARGE MORTGAGES
While equity in a property is a necessary condition for getting a second charge mortgage, there may be additional criteria to meet. For example, lenders may require that the homeowner have a minimum credit score, income level, or a certain amount of time left on their existing mortgage. We can clarify your eligibility criteria and provide a clear idea of what you need to qualify for one.
HOW TO COMPARE SECOND CHARGE MORTGAGE DEALS
When considering a second charge mortgage, it's important to compare deals from different lenders to find the one that offers the best terms and rates. Our mortgage advisers can provide guidance on how to compare deals, including factors such as interest rates, fees, and loan terms.
HOW SECOND CHARGE MORTGAGES DIFFER FROM FIRST CHARGE MORTGAGES
Although both types of mortgages use the property as collateral, there are some critical differences between them.
- Purpose
- First charge: To purchase a property
- Second charge: To borrow money against the property's equity
- Security
- First charge: The property itself
- Second charge: The property's equity
- Interest rates
- First charge: Typically, lower
- Second charge: Typically, higher
- Eligibility
- First charge: Typically, stricter
- Second charge: Typically, more lenient
- Repayment terms
- First charge: Typically, longer
- First charge: Typically, longer
SECOND CHARGE MORTGAGE FAQS
How do I apply for a second charge mortgage?
You can apply for a second charge mortgage by speaking with your lender. Most applications can be made online or in person.
Who is suited to a second charge mortgage?
A second charge mortgage is available to any homeowner who has equity in their property. Your suitability will be determined on a case-by-case basis and by the purpose of the loan.
Are second charge mortgages cheaper than remortgaging?
Sometimes second charge mortgages are a cheaper option to remortgaging, especially if your credit score has deteriorated. However, there is no blanket rule, and everyone’s situation should be considered on its individual merits.
Is a second charge mortgage the same as a personal loan?
Although a second charge mortgage is an alternative option to a personal loan and vice versa, they are different. To understand the difference and what they mean for you, speak with an experienced mortgage adviser.
WHY USE AN ADVISER TO HELP FIND A SECOND CHARGE MORTGAGE?
The idea behind a second charge mortgage is straightforward, and most homeowners can understand it easily. However, understanding the finer details of these products and if you can benefit from one is more complicated. A mortgage adviser can assess your situation and provide expert advice, so you don’t make a costly mistake.
CONTACT US FOR MORTGAGE ADVICE
Our team at Elevate is experienced and knowledgeable in providing second charge mortgage services. We’re based in Beckenham and Bromley, and work with clients throughout London. Please do not hesitate to contact us if you require advice or assistance in this area.
A MORTGAGE IS A LOAN SECURED 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.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.