Is a secured loan (second charge) right for you?

More people than ever before are turning to a second charge mortgage to raise funds rather than taking out a personal loan or re-mortgaging.

A second charge mortgage explained

Second charge mortgages are becoming increasingly popular and are at their highest level since 2008.

A second charge will allow you to borrow a lump sum secured against your property. You repay this extra loan alongside your existing mortgage over a fixed term.

Many people use them to raise money as an alternative to a re-mortgage.

How do you qualify?

To qualify for a second charge mortgage you must be a homeowner, although you don’t necessarily have to be living there. While a first charge mortgage is based on a number of factors, including your deposit, credit score and ability to pay each month, a second charge mortgage is based on the equity available in your property.

What is equity within a property?

This is the percentage of your home owned outright by you. You can easily work this out by calculating the amount you owe on your property against the value of it. So, if your property is worth £200,000 and you still have to pay off £100,000 on your mortgage, you have £100,000 in equity.

You don’t need to have a high credit rating in fact you might even be able to get one with a low score. This is because lenders look more favourably on borrowers with a poor credit rating if they are prepared to borrow against their home. The typical minimum term is 5 years and the maximum is 30 years and they can be paid off alongside your existing mortgage.

You can normally borrow from £1,000 (varies from lender to lender) upwards and the greater the equity in your property, the more you will be able to secure.

Like to know more?

If you would like to know more please do make contact and one of our independent qualified advisers will be happy to help.