See how we can help

Get started online

Homeowner Loans Second Charge

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Nov 14, 2022

Homeowner Loans Second Charge

homeowner loan is a similar type of debt to a standard mortgage, but different because it is secured against your existing home, therefore it is sometimes referred to as a secured loan.

Similarly, the term second charge refers to a second, third, or fourth mortgage taken out as an additional loan. It is not an increase applied to an existing mortgage.

Use our online mortgage calculator as a guide for your monthly repayments now

We are expert mortgage brokers

We have access to over 200+ lenders in the UK to get you the best rates

Get your Quote

What Is A Second Charge Loan?

A second charge loan or second charge mortgage is a second mortgage taken out on a property you already have a mortgage on. This means that when you decide to take out a second charge mortgage, you are securing it against your home, or using your home as collateral, in order to borrow money.

This second mortgage is taken out in addition to your existing mortgage, likely from a different mortgage lender. Although both mortgages are taken out on the same property, they are, in fact, separate and distinct loans.

If you take out more than one mortgage, the first mortgage will retain priority over the second charge mortgage. If you are unable to meet the agreed mortgage payments and are forced to sell the property, the first mortgage lender will gain automatic priority on released equity.

Get started online


The Steps To A Second Charge Mortgage

Any homeowner considering a second mortgage or homeowner loan ought to weigh up the pros and cons, decide whether it is the most efficient way to raise some extra money and whether they have the regular income required to keep up with two mortgage payments.

If you decide to go ahead with taking out a second charge mortgage, the next step is to seek out a second mortgage lender.

The amount you can borrow, as well as the second mortgage interest rate, will depend on your monthly income, credit rating, and the value of your property.

Second mortgage lender

Typically, a homeowner taking out a second charge mortgage will be required to source a separate mortgage lender from their first mortgage.

Here in the United Kingdom, the majority of mainstream banks offer homeowner loans to new and existing customers.

Your choice of second mortgage lender might depend on your employment status, such as whether you are self-employed, as well as your credit rating.


Who Can Take Out A Second Charge Mortgage?

Any homeowner is eligible to apply for a second charge mortgage. You do not even need to live on the property so long as you own it, so it could be a buy-to-let property.

Any homeowner can apply for a second mortgage just as long as they meet the criteria. Does the homeowner have a high enough salary to keep up with the repayments of both their first mortgage and this new, second-charge mortgage?

If you own a property to secure the loan against and find a second-charge mortgage lender willing to loan you the money, then you can go right ahead and take out that second mortgage.

There are two exceptions which might make applying for a second mortgage more difficult for some customers:

  • Many lenders will not agree to a second mortgage if the homeowner will be over the age of 85 at the end of the repayment period. Each mortgage lender will have its own upper age limit.
  • If you are self-employed, expect to be asked to prove that your income is stable. The majority of renowned second-charge mortgage lenders will want to see three years of successful trading, though some might accept fewer or occasionally none.

Get started online


Is A Second Charge Mortgage A Good Idea?

Getting your hands on a little extra cash might seem like a truly fabulous idea. You can start that business you always wanted to and be self-employed, right? Or perhaps you would prefer to use the money to convert the attic or redo the kitchen.

Oftentimes, taking out a second mortgage is the only way to quickly raise the money you need. While it is true that second-charge mortgages are effective, they are not without risk.

Let’s take a look at some of the advantages and disadvantages of applying for a second mortgage or homeowner loan against your home or property.


  • If you take out a second charge mortgage, you might be able to raise money quickly without being forced to conduct a full remortgage of the property. Second mortgages are an effective way to raise money quickly if there is a change in your financial circumstances.
  • Many people opt to take out second mortgages to help them repay their existing mortgage more quickly without accidentally incurring early repayment charges.
  • You can use the existing equity in your home for a second-charge mortgage or secured loan, possibly to conduct necessary home improvements or repair work which will ultimately increase the value of your property.


  • It might be called a secured loan, but all that means is that the second mortgage is secured against your home. It is in no way more secure for the homeowner. If your personal circumstances take a turn and you are unable to meet the mortgage repayments, you could wind up losing your home altogether.
  • You will likely take out a second-charge mortgage with a different mortgage lender than your first mortgage. A second-charge mortgage will nearly always have a higher interest rate. This is because it is a bigger risk for the mortgage lender, as, in the event of repossession, the primary lender automatically assumes priority.
  • As a type of secured loan, the terms on a second-charge mortgage are often as long as twenty years. This seems like plenty of time to repay the money you have borrowed but ultimately, the longer your loan repayment term, the larger your overall interest bill.

Get started online


How Much Can You Borrow In A Second Charge Mortgage?

There is no set amount that a homeowner can borrow as a second-charge mortgage. In fact, the amount of money available via second-charge mortgages will depend on your eligibility and your dependability, according to the mortgage lender.

Your income

Yes, your income will absolutely affect just the home much you can borrow as a second-charge mortgage. So long as you have a stable salary, you should be able to find a mortgage lender willing to work with you, but if your monthly earnings are quite low, then you might find that this will restrict the amount of money available for you to borrow.

Additionally, since a lower-income borrower is often considered a higher risk, expect the interest rate to be steeper.

Many second-charge mortgage lenders will consider only your base salary when drawing up the terms of the mortgage. Other lenders might also take into account other sources of income, including commission, overtime, and benefits.

Available equity

The maximum amount of money available for a homeowner to borrow via a second-charge mortgage will depend, ultimately, on how much equity they have built up in their home.

Okay, so just what is equity?

The term equity refers to how much of your home or property you actually own. This means how much of your initial mortgage you have paid off and how much of your home now belongs to you.

The more positive equity in your home (the more you have paid off your first mortgage), the more money you can ask for in your second charge mortgage.

Positive equity will increase the amount of money a homeowner can borrow as it demonstrates that they are at low risk of missed mortgage repayments, and in the event of repossession, there is less competition from the primary mortgage lender.

Get started online


When Is A Second Charge Mortgage A Good Idea?

There are many reasons that a homeowner might investigate the possibility of second-charge mortgages and many reasons that taking out a second mortgage or homeowner loan is a good decision under the right circumstances.

One reason for borrowing money through a second-charge homeowner loan might be to achieve something specific, such as home improvements, which will ultimately increase the value of your home.

Many homeowners find that due to a change in personal circumstances or financial circumstances since they took out their first mortgage, their credit rating has dropped. In this case, having a second mortgage secured against a property might prove the only way to quickly raise the necessary funds, though it carries a steep risk.

Taking out a second mortgage against your property can sometimes prove more affordable or accessible than other types of unsecured borrowing, such as a credit card. The terms of borrowing are also longer, which might be seen as an instantaneous advantage to some potential borrowers, though the overall interest is more costly.

Debt consolidation

A second reason, which attracts many homeowners into applying for second-charge mortgages, is to consolidate debt into single monthly repayments. In this instance, the homeowner would secure their second mortgage against their home and use the borrowed money to pay off the existing mortgage or other debts.

Alright, this sounds good, doesn’t it? Well, it can be, especially if the interest rate on the second mortgage is particularly good. There is a risk to debt consolidation, though. You will be transferring debt from unsecured loans to secured loans, meaning that if you fail to meet your monthly repayments, you could stand to lose your property.

Get started online


When is a second-charge mortgage not a good idea?

A second mortgage or second-charge mortgage might sound like the perfect, immediate solution to your problems. However, it isn’t always the answer and may actually create more problems than it solves.

If you only need to borrow a small amount of money, for example. With a second mortgage, you would be tying yourself to a lengthy repayment plan costing you more money through a potentially steep interest rate. If you are able to repay the borrowed money in a shorter period of time, consider alternate types of personal loans or credit cards.

If you have any doubts at all about whether you can cover the monthly payments over the full term of the loan, you should be wary. It is easy to overlook the fact that many loans offer lower interest rates during the first few months or even years.

If you are moving home

Homeowners who are likely to be moving from their existing property in the near future might be better suited to an alternate personal loan.

Since the loan is secured against your property, some lenders will expect the amount to be repaid in full before the property is sold. Others might be willing to transfer the secured loan to a new property.

Get started online



Is a second charge the same as a second mortgage?

A second charge mortgage (or second charge) is a loan taken out after the first mortgage and secured against your property.

People also use the term second mortgage to refer to an entirely new mortgage taken out to buy a second property.

Is it possible to have more than one second charge mortgage?

While there is no law preventing a property owner from taking out more than one additional charge mortgage against the same property, securing more debt against the property increases the risk.

Why might a mortgage company refuse a second charge?

Your mortgage company might refuse a second charge taken out against your property if you are asking to borrow more money than you have available in equity, as they would lose money in the event the property was sold.


In Conclusion

Many homeowners look to second-charge mortgages as a way to raise a little extra money fast. While this can be a quick, effective solution to an immediate problem, it can also come with much uncertainty and carry severe risks.

If you need money, you need money, right? If a personal loan or credit card just isn’t going to cut it, then it is absolutely worth speaking to a few second mortgage lenders and deciding whether this is the path for you. A second-charge mortgage might happily stretch out repayments for a more manageable period and even help you consolidate existing debt.

Homeowner loans or second mortgages are worth investigating as a secure source of immediate income. You might discover that you get a better mortgage deal than your current mortgage deal.

However, you will be putting your property at risk. Second mortgages tend to come with a higher interest rate, too, and ultimately, what it comes down to is whether what you need money for right now is worth the risk of losing your home. Contact us now for help with your decision.

Get started online