Homeowner borrowing guide
Second charge mortgages
A second charge mortgage lets a homeowner borrow against their property while keeping their existing mortgage in place. It creates a separate loan and payment, so the decision calls for a careful comparison of costs, alternatives and the risk to your home.
Count Ready is a credit broker, not a lender. An enquiry is not a loan application. By Count Ready · Updated .
Your home may be repossessed if you do not keep up repayments on your mortgage.
How does a second charge mortgage work?
It is an additional loan secured on a property that already has a mortgage. Your first mortgage remains in place; the new lender takes a second-ranking charge and you have another repayment to budget for.
If the property is sold, the first mortgage lender is paid first from the proceeds. The second lender is then paid from what remains. That order of security does not make the second payment optional. Missed payments can lead to serious consequences, including repossession.
The amount you might be able to borrow depends on the value and suitability of the property, existing secured borrowing, your income and spending, credit history and the lender’s current criteria. Equity alone does not establish affordability or approval.
Which borrowing route should you compare?
Ask for figures for the same amount and purpose. Compare the monthly payment, full term cost, fees, the effect on your current mortgage and what happens if you repay early. A low monthly figure by itself does not identify the better option.
For a case-by-case worksheet, see our secured loan versus remortgage comparison. It sets out how to compare combined payments, fees and the end of your current deal.
Second charge mortgage
Keeps the first mortgage in place but adds a separate secured loan. This could be relevant where replacing the first mortgage would be costly. Check both payments and the new loan’s full cost.
Further advance
Additional borrowing from your present mortgage lender, if offered and suitable. Ask for its rate, term, charges and affordability assessment. The extra borrowing may have different terms from your current deal.
Remortgage to borrow more
Replaces the existing mortgage, potentially with a larger one. Include any early repayment charge, product or legal costs and the rate on the whole balance. See remortgage advice.
Unsecured borrowing or waiting
A suitable personal loan would not use your home as security, although availability and cost vary. If the expense is optional, waiting or saving may mean taking on no new debt.
What will it cost, and what could go wrong?
There is no single second charge rate or borrowing limit that applies to every case. Request a written illustration showing the interest rate, term, monthly payment, total amount payable and all lender, broker, valuation and legal charges. Check whether any fee is added to the loan and would itself attract interest.
Using a second charge to clear cards or personal loans can reduce a monthly payment by spreading debt over longer. You may repay more in total and would make previously unsecured debt secured on your home. The FCA has highlighted the need to assess that trade-off and whether creditor arrangements are more appropriate when someone is struggling.
Before proceeding, ask what happens if you sell, move, repay early or can no longer keep up payments. Obtain redemption figures for the first and second mortgages when planning a sale. Do not assume the second charge can simply move to a new property.
Check how clients describe the advice
Borrowing against your home deserves a clear explanation of the options and costs. Client feedback can help you assess the advice experience, although a review cannot predict a lender’s decision in your case.
You can also check Count Ready’s company and regulatory information.
What happens before an application?
- Explain the need. Tell an adviser how much you hope to borrow, why, and whether there is a deadline.
- Review the whole budget. Include both mortgage payments, other debts and regular household spending.
- Compare realistic routes. Check the first mortgage terms and any early repayment charge, then compare full costs and risks.
- Understand the proposed product. Read the lender’s illustration and broker fee disclosure before choosing whether to apply.
Useful starting documents include your current mortgage statement, income evidence, bank statements and details of existing debts. An adviser can tell you what is needed for your case. A discussion may show that borrowing now is unsuitable.
Second charge mortgage questions
Is a second charge mortgage the same as remortgaging?
No. A second charge adds a separate secured loan while the first mortgage stays in place. Remortgaging replaces the existing mortgage. Compare both options, including any early repayment charge and the full cost of borrowing.
Does having equity mean I will be approved?
No. Property equity is only one part of a lender’s decision. Income, expenditure, credit history, existing mortgage payments, property details and the lender’s current criteria also matter. There is no guaranteed amount or acceptance.
Can I use a second charge to consolidate debt?
It may be considered, but you would be securing those debts against your home. A longer repayment term can increase the total amount repaid even if the monthly payment falls. Compare alternatives and seek free debt advice if payments are already difficult.
What happens to a second charge if I sell my home?
Ask both lenders for redemption figures and speak to your conveyancer before committing to a sale. The first mortgage has priority over the sale proceeds and the second charge also needs to be dealt with. Do not assume it can move to the next property.
Will asking Count Ready for a callback affect my credit file?
A callback request is an enquiry, not a lender application. Before proceeding, ask your adviser whether a proposed lender search would be soft or hard. Search practices vary, so do not assume the same process applies to every lender.
Sources and limits. This is general UK information, not a personal recommendation or lender decision. Product availability, terms and fees depend on individual circumstances. The explanation and debt-consolidation cautions were checked against:
Discuss the options before you borrow
Tell Count Ready what the funds are for and what you still owe on your current mortgage. We can explain which information is needed to compare the routes and whether a second charge merits a closer look.
Please do not put account numbers or confidential documents in a callback message.
Before you decide
There is no fee for the initial evaluation. Check the Terms of Business and ask about any fee that would apply later. Read the Privacy Policy before submitting your details.
An enquiry does not reserve a rate or guarantee a loan. The adviser may recommend a different route or no further borrowing.
Your home may be repossessed if you do not keep up repayments on your mortgage.