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Second Charge Mortgage

At Finance Magic we offer tailored solutions to suit your process, Second Mortgages offer value to clients who are.

Second charge mortgages are often referred to as second mortgages because they have secondary priority behind your main (or first charge) mortgage. They are a secured loan, which means they use the borrower’s home as security. Many people use them as a way to raise money instead of remortgaging.

The amount people raise from taking out a second charge mortgage on their property can be used to fund a number of things, more commonly being used for renovating their home, building extensions, investing in another property or even debt reconsolidation.

How does a second mortgage work?

You must be a homeowner to get a second mortgage, although you do not necessarily need to live in the property. A second charge mortgage allows you to use any equity you have in your home as security against another loan. It means you will essentially have two mortgages on your home. Equity is the percentage of your property owned outright by you, which is the value of the home minus any mortgage owed on it. For example, if your home is worth £250,000 and you have £150,000 left to pay on your mortgage, you have £100,000 equity. A second charge mortgage can be a loan of anything from £1,000 upwards. Lenders now have to comply with stricter UK and EU rules governing mortgage advice, affordable lending and dealing with payment difficulties. This means that lenders now have to make the same affordability checks and ‘stress test’ the borrower’s financial circumstances as an applicant for a main or first charge residential mortgage.

Borrowers will now have to provide evidence that they can afford to pay back this loan. For more details on what an affordability assessment might involve, and the evidence you may be required to provide to support your second mortgage application, contact TS Asset Management Ltd.