Is a second charge loan right for you?

Second charges are becoming more popular by the day, the good thing is the homeowner is becoming aware of their availability. One thing to be certain of, if you are considering raising funds using your property as security you will be getting a much better interest rate than a non-secured loan.

Could I get a second charge loan?

Lenders now have to comply with stricter UK and EU rules, governing:

  • Mortgage advice
  • Affordable lending
  • Dealing with payment difficulties.

This means that lenders now have to make the same affordability checks, and “stress test” the borrower’s financial circumstances as an applicant for a main or first charge residential mortgage would have to.

Borrowers will now have to provide evidence that the borrower can afford to pay back any loan.

Why a second charge mortgage?

  • If you’re struggling to get some form of unsecured borrowing, such as a personal loan, perhaps because you’re self-employed
  • If your credit rating has gone down since taking out your first mortgage, re-mortgaging could mean you end up paying more interest on your entire mortgage. A second mortgage means extra interest just on the new amount you want to borrow
  • If your mortgage has a high early repayment charge, it might be cheaper for you to take out a second charge mortgage rather than to re-mortgage.

Some things to consider before taking out a second mortgage

  • Before you take out a second charge mortgage, it’s a good idea to get advice from a suitably qualified advisor.
  • They will have to follow the rules as set out by the FCA when dealing with you. These rules are designed to protect you.
  • If you choose not to get formal advice, you run the risk of taking a loan that isn’t suitable for you.

Help required?

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

Second charge approvals increase

Brokers and lenders alike have welcomed the latest figures showing second charge lending hitting an all-time high in June of this year.

These figures are partly down to the new homeowner awareness of second charge lending and what’s on offer. The lending industry has done an excellent job of spreading the word and showing just how a second charge loan in certain circumstances is better than a conventional re-mortgage.

New and existing buy-to-let investors have started to raise the required deposit levels by taking out second charges on existing property holdings.

July and August been very busy as well with brokers reporting a steady rise in both applications and completions compared to the same period last year.

There is little doubt second charge lending is increasing its popularity month on month. When you compare the interest rates on offer to unsecured lending it is very evident why this form of fund raising is growing in stature.

There are many advantages that a second charge loan offers, not least the quick turnaround time which can be as little as 15 working days. This of course is a great deal faster than a standard re-mortgage which can drag on for months.

As second charge lending grows in popularity new and innovative products are hitting the market on a regular basis. Interest rates have reduced considerably over the last 3 years and they now offer a very attractive overall package.

The largest growth area of this type of funding is via the self-employed workforce. Good news is the lenders have reacted positively to this and look very favourably towards the borrowers requirements.

Second charge lending will not suit every case, it is vitally important to get the correct advice as a wrong choice can cost hundreds extra in unnecessary interest charges.

Help needed?

If you are considering raising funds on your property please do contact one of our fully qualified advisers who will guide you in the right direction.

Second charge lending speeds up

Second charge lending continues to grow in stature month on month as homeowners look for loans at affordable rates.

A survey recently taken from 5000 homeowners clearly shows speed of completion is a key factor when taking out a new loan. Obviously the costs and interest rates were very high on the list of wants but speed was very important also.

Survey facts in order of priority

  • Monthly cost, interest rate
  • Speed of completion
  • Set up charges
  • Ease of application
  • Early redemption fees


One of the big appeals of a second charge loan is it meets all the surveys key facts such as costs and speed. On average a second charge loan is completed within 15 working days, this does of course vary dependant on the complexity. This financial year has also seen a significant reduction in set up costs plus interest rates are at the lowest ever recorded.

Second charge lenders have seen their market share grow at a rapid rate. They have been quick to recognise the importance of speed in completing a deal as competition increases. One major lender commented “The last two years has seen huge changes within the second charge market with faster completions being a key factor to winning business”.

There is no doubt second charge lending has just had its most successful year, the good thing is lenders have taken this on board and reacted positively to meet the challenges.

Need some assistance

If you think this type of loan could assist you with your future planning make sure you get the right one to suit your needs. There are many different lenders offering numerous second charge loans so please do call our qualified advisers who will be happy to help.

Why choose second charge lending?

Loan choices these days are vast and in many cases very confusing for the borrower. It is highly recommended before you take on a new loan to get qualified advice as a wrong move could cost you dearly in the long run.

The expert will look at all your choices and may well select a secured loan as right for your needs. This won’t always be the case. Of course the final choice will always be yours but let’s look at why secured lending may help.

One reason you may wish to choose a second charge loan is that it’s likely to offer better rates of interest as the loan is secured.

Unsecured loans from high street banks and other sources can be notoriously expensive, we have all seen the rates charged by the so called “pay day” lenders.

The reason for a secured loan being more cost effective is due to the lender having to assess the risk. If you are a high-risk borrower they will need to offset the risk with higher interest rates. So if you offer security on the other hand, then the risk involved is much lower and the lender will offer far better rates.

This is indeed particularly useful for those who might find it difficult to obtain the loan required without security. Such groups of people may include the self-employed or those who have had past credit problems.

For many people the choice is between a second charge loan and re-mortgaging rather than between second charge and unsecured loans. There are a number of reasons a second charge loan may be preferable over a re-mortgage but there are two key very common factors.

1) Your credit history has deteriorated since you took out your mortgage.

2) You currently have a mortgage with penalties to change.

These two factors alone make a second charge deal an attractive way forward to securing the funds required.

Need some assistance

If you think this type of loan could assist you in your future planning it is very important to ensure you get the right one to suit you. There are many different lenders offering numerous second charge loans so please do call our advisers who will be happy to help you achieve the correct loan for you.