Second Charges

If you have equity available within your home and you need to borrow some money and a re-mortgage is not the right option for you then a second charge might be worth considering. A second charge is a secured loan against your property and can be used to raise funds for a project.

A second charge or second mortgage is defined simply as another mortgage secured by equity in your own house. This is an alternative to remortgaging your property and can come with some risks as well as advantages.

Is a second mortgage cheaper than remortgaging?

Remortgaging will often involve having to pay an early repayment charge which is usually expensive if you're tied in to an existing fixed rate for example. Taking out a second mortgage means you can avoid this while being able to pay off your first mortgage.

When shouldn’t I consider a second mortgage?

If you are in the process of moving homes, both mortgages must be cleared. Other savings will be important here so you are left with enough to cover the deposit on your next home.

It is crucial that you are able to afford your current mortgage before considering any large financial commitments like a second mortgage/ secured loan. Your home could be at risk if you are unable to make payments.

What rates should I expect with a second mortgage?

By taking out a loan with your existing mortgage provider there is opportunity to ask for a loyalty bonus rate or other preferential benefits. If this is not possible, take note of their rates as they may be cheaper than getting a second charge mortgage altogether.

Calculate possible increases in interest rate on your first mortgage against a second charge mortgage to determine if it is the right choice for you.

Please note that for second charge mortgages we refer on to a trusted 3rd party who will review your options and provide advice, Key Mortgages Lincoln will not be responsible for the advice or service provided.