What is a second charge mortgage?

What is a second charge mortgage?

author: Hayley Cox

By Hayley Cox


Unfamiliar with the term ‘second charge mortgage’? Perhaps it will ring a bell if we say ‘homeowner loan’ instead or ’secured loan’.

The fact is, they’re all the same – and if you have a big home improvement project planned, you want to consolidate your debts, or you have another big purchase in the pipeline, it could provide you with the money you need.

Read on to learn more about second charge mortgages.

Loan for you, security for your lender

That’s the essence of a second charge mortgage; it is secured against the equity you have in your home, which provides your lender with some security. If you stopped making your repayments, they could sell the property to get back what you owe them.

It is very important you understand this before you take out a second charge mortgage. Your actual mortgage will take priority over your loan – that’s why it’s known as a second charge mortgage. However, if you don’t keep up with your monthly repayments, the very roof over your head is at risk – as is your credit history.

Why take out a second charge mortgage?

When there are so many borrowing options available, most of which do not use your home as security, why would you choose a second charge mortgage? Well, ultimately the type of credit you choose comes down to your own circumstances and preferences. However, some things make a second charge mortgage more suitable in certain situations than other options.

To start with, you can usually borrow more with a second charge mortgage than you could with a personal loan, which is not secured against your property. With a homeowner loan from Ocean Finance, you can borrow between £10,000 and £500,000, for example.

Another thing that might attract you to a second charge mortgage is that your credit history does not play so great a role in the application process, because your home acts as the security. If you have had difficulties with borrowing in the past and your credit history is not as good as you’d like, this could be a real draw to you.

Having said that, it’s important you know you can afford the repayments on your second charge mortgage. If you have struggled with your borrowing in the past, keep in mind that if you get into similar difficulties with this type of loan, your home will be at risk.

Search smart

If you’re considering taking out a second charge mortgage, you can use Ocean’s Smart Search to find out whether you’re eligible before you apply. Using it doesn’t affect your credit history either.

You can also try out our loans calculator. Just enter how much you want to borrow, the time period you’d like to spread your repayments across and the APR, and the calculator will tell you how much you could pay each month for the loan. Of course, the actual amount you’ll pay won’t be determined until your application is accepted, but a calculator can give you a good estimate – which can help you decide how much you can afford to borrow.

For all the latest hints and tips on loans, keep checking the blog.

Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.

What is a second charge mortgage? What is a second charge mortgage?