A second charge mortgage is a secured loan that allows you to borrow money by using your property as collateral. This means that if you default on the loan, the lender has the right to repossess your home and sell it to recover the outstanding debt.
This mortgage is also known as a "second mortgage" or a "secured loan against property." It is called a "second" mortgage because it is taken out in addition to your primary mortgage, which is the first charge on your property.
One of the advantages of this mortgage is that it allows you to borrow a large sum of money, usually up to 75% of the equity in your property, but in some cases up to 100% Loan to Value. This can be useful if you need to finance a major home renovation, pay for a child's education, or consolidate high-interest debt.
Another advantage of a second charge mortgage is that the interest rates are often lower than those of unsecured loans or credit cards, since the loan is secured against your property. However, the interest rates are usually higher than those of your primary mortgage, since they are considered riskier for the lender.
It's important to note that taking out this mortgage means you will have two separate loans secured against your property, which could put your home at risk if you are unable to keep up with repayments. Before taking out a second mortgage, it's important to carefully consider your ability to repay the loan, and seek professional advice if necessary.
Overall, this mortgage can be a useful tool for homeowners who need to borrow a large sum of money, but it's important to understand the risks involved and to make sure you can afford the repayments before you apply.
Who is it suitable for?
A second mortgage may be suitable for someone who:
Needs to borrow a larger sum of money: It can provide access to a larger sum of money than an unsecured loan or credit card because it's secured against the equity in your property. If you need to borrow a significant amount of money, a second charge mortgage may be a more appropriate option.
Wants to keep their current mortgage: If you have a good interest rate on your existing mortgage and you don't want to remortgage, this mortgage can allow you to access additional funds without having to refinance your entire mortgage.
Has a poor credit rating: If you have a poor credit rating, you may find it difficult to obtain an unsecured loan or a remortgage. With a second charge mortgage, the loan is secured against your property, so lenders may be more willing to lend to you even if you have a poor credit score.
Wants to consolidate debts: If you have multiple debts with high-interest rates, a second charge mortgage can allow you to consolidate them into a single, more manageable monthly payment with a lower interest rate.
Needs a shorter loan term: A second charge mortgage can be taken out for a shorter term than a traditional mortgage, which may be suitable for those who need to borrow money over a shorter period.
It's important to note that a second charge mortgage is a significant financial commitment and should only be considered if you can afford the repayments and understand the risks involved.
Before taking out a second charge mortgage, it's important to seek professional advice and consider whether there are any other options available to you please contact us here at Robin Hood Mortgages Ltd to discuss your needs and goals.
DISCLAIMER
Whilst Robin Hood Mortgages Ltd take all reasonable steps to ensure the accuracy and timeliness of the information contained on this website. We cannot guarantee this and accept no liability for any errors or omissions. Any information provided on this website is for information purposes only. Full advice and recommendation can only be obtained by a suitably qualified adviser. Under no circumstances should any of the information contained within this website be construed as advice. You should seek professional advice in respect of your own circumstances. The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.
think carefully before securing other debts against your home. your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Robin Hood Mortgages Ltd is Authorised and regulated by the Financial Conduct Authority under reference 987739. You can check this on the FCA’s website www.fca.org.uk or by contacting the FCA at 0800 111 6768. The firm is registered in England & Wales at P.O. Box 11018, Nottingham, NG5 0NE. Telephone: 01156 712351 under reference 11416342.
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A summary of our internal procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 0234 567.
Although Robin Hood Mortgages are regulated by the Financial Conduct Authority, Business Finance, Loans and most buy-to-let and offshore mortgages are not regulated by the Financial Conduct Authority.
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