Second Charge Mortgage

If you’re a homeowner, we know that sometimes money can be tight. When you’re in need of extra funds, you may be tempted to take out a personal loan or you might have even considered remortgaging.

However, with a second charge mortgage, you can get access to the money you want without remortgaging or taking out a loan.

What is a Second Charge Mortgage?

A second charge mortgage or a second mortgage is a secured loan against the home that you own. It allows you to use any equity in your home, as security against another loan.

Equity is the percentage of your property owned outright by you, which is the value of the home, minus any mortgage owed on it.

Say, for example, your home is worth £250,000 and you have £150,000 left to pay on your mortgage, you would have £100,000 in equity. So the maximum sum you can borrow is £100,000.

It’s important to understand that a second charge mortgage would still be paid off alongside your first mortgage. So if you took out a second charge mortgage, you would have two loans (or two mortgages) secured against the same property.

Can I Get a Second Charge Mortgage?

To be eligible for a second charge mortgage, you need to be a homeowner.

You will have to go through thorough lenders checks so that they can assess your financial circumstances. You will have to prove your income and ability to repay the second charge mortgage repayments.

But don’t be discouraged. You don’t necessarily have to have a good credit score in order to get a second charge mortgage. In some cases, you may be able to get a second mortgage with a less than perfect or bad credit score, which is why they are a favourable option for people with bad credit.

However, the amount a lender will give you will be based and secured on the amount of equity in your home.

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Why People Take Out a Second Charge Mortgage

People usually opt for a debt consolidation mortgage as it can dramatically reduce the interest rate you pay, which lowers your overall monthly payment and helps you pay off your debts quicker. Seems a no-brainer, right?

It can also simplify the financial responsibility into one monthly commitment so that you no longer have to worry about keeping track of numerous different payments on cards and loans that go out on different days of the month – adding more structure to your outgoings.

A debt consolidation mortgage keeps things nice and simple and puts you in control of something that once had control over you.

Get Advice from The Experts

Making a hasty decision about second charge mortgages can result in you getting a loan that’s not right for you and could cost you in a multitude of ways.

It’s important to remember that a second charge mortgage is secured against your home. Failing to keep up with the monthly repayments could result in your property being repossessed. And you will have two mortgages that leave your home open to this risk. So it’s best to avoid it if you are just about managing to repay your existing mortgage. We advise thinking things over carefully before securing other debts against your home.

Nice Advice and Guidance

Luckily, If you’re unsure of anything to do with second charge mortgages or anything else, there are providers that will talk you through the best options for you and at what rates.

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Second Charge Mortgage

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