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Can I get a second charge on a property with equity release?

Answered on 12 June 2016

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As an existing equity release lifetime morgtagee currently with loan to value of 17.3% with unused cash facility of £65K which would take total L/V to 30.7% including ERC of £12K, I am seeking to raise a further £50K on an interest only mortgage for a period of up to 7 years. I am currently 68 years old, house value £485k jan 2012 by RICS's valuation. Which Equity Release companies if any will allow a second charge on property in these circustances?

Answered by: Nicholas Mendes

Equity release companies that allow a second charge

Unfortunately there are not any listed equity release companies that will consent to a second charge being registered on your property. Usually the reason for this is the equity between how much you have borrowed and the property value forms a safety net and the means to repay the existing debt in the future.

If you are over a certain age, it is not unreasonable to expect you to live for the term and with an addition requirement to raise additional funds, it’s understandable why Equity Release lenders would not allow a second charge or lend you more at this stage.

Alternative ways to raise money on your property

Depending on your earned / retirement income it may be possible to arrange an ordinary mortgage to repay your existing debt and early repayment charges.

You could benefit from speaking to one of our independent mortgage advisers.  Please call 023 8235 2300 to speak to an adviser about this further, and feel free to read our borrowing into retirement guide.

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Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.

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1. First Charge - I understand that a first charge mortgage could be a more cost-effective alternative to a second charge and have considered this before proceeding.

2. Existing Mortgage Product - I am currently tied into a mortgage product with an early repayment charge if I choose to leave this deal early and I have investigated the possibility of a further advance from my existing lender.

3. Product Suitability - I understand that second charge mortgages may not be suitable in all situations and that advice will be provided by our second charge partner “The Loan Partnership” to help determine if this is the right solution for me.

4. Data Sharing Consent - I agree that my name and contact information can be shared with a trusted partner firm – The Loan Partnership – to receive personalised advice on second charge options.

5. Understanding of Risk - I understand the risks associated with securing other debts against my home and my home may be repossessed if I do not keep up repayments on a mortgage or any debt secured against it. I am also aware that by consolidating existing borrowing that I may be extending the terms of the debt and increasing the total amount I repay.

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*Please note that neither John Charcol Limited nor its Appointed Representatives are providing mortgage advice as part of this enquiry. Second charge mortgage advice will be provided by The Loan Partnership FCA ref 707809. If you need to investigate first charge mortgage options, please contact John Charcol via this contact form.

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