Second charge mortgages are a type of secured loan that allow homeowners to raise extra money without the need to remortgage or take out an unsecured personal loan.
With a second charge mortgage your loan is secured against the value of the equity in your home much like your first mortgage. There are several reasons where a second charge mortgage might be worth considering, including:
Any homeowner with at least 15% equity in their property can apply for a second charge mortgage. Second charge lenders may offer more flexible lending criteria than a first charge mortgage, but broadly applications are assessed in the same way as a traditional mortgage; taking into consideration the property’s value and condition as well as your income and credit rating.
How much you can borrow will depend on the equity in your property - the equity is the percentage of the home owned outright by you. For example, if you bought a house for £500,000 and you have £150,000 left to pay on the mortgage, then you have £350,000 equity. The equity you own in your home will increase with the property’s value.
Second charge mortgages usually let you borrow money starting at £10,000. The higher the equity in your property, the more money you are likely to be able to borrow. Although this would be subject to your income and credit rating.