Looking to Get a Secured Loan?

Second Charge Mortgage Advice

Secured Loans, or to give them their official title, Second Charge Mortgages used to be known as last-resort lending. They tend to be applied for by applicants who, for some reason, cannot or choose not to apply for a normal First Charge Mortgage.

Secured loans are far more popular now as the rates on offer are much lower than previously available.

If you need to raise money against your property, there are 3 main options:

1. A further advance mortgage from your current Lender. 

2. Take our remortgage advice, to move to a new Lender.

3. Second Charge mortgage.

For smaller amounts of borrowing, unsecured loans are also an option. If you opt for a Second Charge Mortgage your existing mortgage will stay in place the same as it is now with your current Lender and the extra funds will be with a different provider.

The second mortgage is on a different rate of interest with a different direct debit. Some people run their second charge loan over the same term as their main mortgage to keep payments low. 

Some of the main reasons people take out additional borrowing are:

• Remortgage for home improvements.
• Injecting cash into businesses.
• Paying for school fees.
• Cosmetic surgery.
• Paying for a wedding/honeymoon/special anniversary/holiday.
• Remortgage for debt consolidation.
• Purchasing cars or other vehicles.
• Paying tax bills.

Reasons why a second charge mortgage may be the most suitable option:

• You want to retain your current mortgage if it has a low interest rate 
• You choose to retain your current mortgage because it’s interest only and you prefer to keep it that way 
• You took out an original mortgage, but are now looking at a self employed mortgage.
• Your income is derived from multiple sources 
• You have a poor credit score· You want to avoid a Remortgage due to large redemption penalties on your current deal 
• You need to raise funds very quickly 
• You are looking to raise capital against your UK property to purchase foreign property 
• You prefer to avoid all up front setting up costs 
• Your current mortgage lender has declined your further advance application 
• You are raising funds to pay a tax bill 
• You want to raise funds to purchase another property which isn’t currently suitable for a mortgage (non-standard construction/property in poor repair) 
• You need to inject cash into a business 
• You need capital to pay business tax liabilities or to clear a business overdraft 

When applying for a secured loan, a broker fee and a lender arrangement fee is normally payable, and these can be paid upfront or you can elect to add them to the loan.

Please be aware that if you do add fees to the mortgage you will pay additional interest. 

You will also end up paying more interest back if you extend the term of any debts you are considering consolidating. If you are securing debts that are currently unsecured you are putting your home at risk if you do not keep up the repayments. 

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

22nd April 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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