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Modern House

Second charge mortgages

Second charge mortgages (also known as secured loans) provide an alternative source of finance to traditional residential and buy-to-let mortgages. In particular, second charge mortgages can provide better value finance than remortgages or second advances (i.e. borrowing in addition to one's existing mortgage). Since the legislative changes by the Mortgage Credit Directive in 2016, second charge loans have become regulated products that can offer finance solutions at competitive solutions. 

At Hilton Finance, we can help you to determine whether a second charge mortgage is right for you. Whilst second charge mortgages represent a specialist source of funding, with our decades of experience and connections with high-street and specialist lenders, we can help you to obtain the most suitable financial solutions.

What is a second charge mortgage/secured loan?

Second charge mortgages work like standard mortgages in that they are loans secured to either a borrower's residence or investment property, with the difference being that they are registered in addition to the first charge mortgage. For this reason, a second charge mortgage is always with a different lender to the first charge mortgage. At the same time, this means that second charge mortgages are usually offered at higher rates than first charges. Nevertheless, in the right circumstances, they can provide cost-effective funding.

In addition, second charge mortgages have been regulated by the FCA since 2016- meaning, they represent reliable and established sources of funding for clients who wish to raise capital for a variety of purposes.


Purposes of a second charge mortgage

Like conventional remortgages, a second charge mortgage may be taken out for a range of reasons: 

  1. Raising funds for business investment.

  2. Home improvements

  3. Debt consolidation 

  4. Raising funds for the purchase of Buy-to-Let

  5. Transfer of equity 

  6. To finance other significant expenditure, such as tuition fees, weddings or luxury purchases.


Who provides second charge mortgages?

A second charge mortgage is a more specialist product in the mortgage industry. Since a second charge loan means that the lender is second in priority, it poses a greater risk to them. Therefore, many providers of conventional mortgages do not offer second charge mortgages. For this reason, the experience of a mortgage broker becomes invaluable and should you be interested in taking a second charge mortgage, contact us now.


When a second charge mortgage might be suitable for you

There are a number of scenarios where a second charge suitable might be the right option for you:

  1. If you wish to avoid an early repayment charge which may otherwise occur via a remortgage.

  2. If your current mortgage is at a competitive rate and you wish not to lose it by remortgaging it. 

  3. If you wish to keep the new mortgage separate from the existing one. 

  4. If you have adverse credit and are unable to secure a standard remortgage. 

However, it is important to note that a holistic approach is required when assessing whether a second charge mortgage is right for you. The same legal obligations apply to secured loans meaning if you default, your property may be repossessed. Hence, it is highly recommended that you seek professional advice and here, at Hilton Finance, we can determine whether second charge mortgages are right for you.

Get in Touch

53 Grasmere Road, Gatley




0161 225 9798

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