When it comes to finding the right mortgage for your needs, it’s important to explore all of your options. And if you’re looking for a second mortgage, that means working with a second charge mortgage broker.

While demand for second charge loans has increased, customers who apply directly to a high-street lender rather than using a broker may be charged more than they expect.

Here are just a few reasons to work with a broker –

1. An experienced broker will have access to a wide range of lenders and products
2. They will tell you why a secured loan is the best option
3. They’ll take care of the paperwork for you, making the entire process quick and easy.
4. They can help you get a competitive interest rate
5. They’ll be there to answer any questions you may have along the way

What is a second charge mortgage?

A second charge mortgage is only available to people who own their own home and is a loan that’s secured against your property. It sits in ‘second place’ behind your first charge main mortgage, which means that if you default on the loan, the lender can take possession of your home and sell it to repay the debt.

What is a second charge on a property?

This type of loan can be a good option if you’re looking to borrow a large sum of money and you don’t want to remortgage your property.

It’s also worth noting that second charge mortgages typically have shorter terms than first mortgages, which means you’ll need to repay the debt sooner. However, this can also make them a more attractive option if you’re looking for a shorter-term loan.

Who Could Benefit from a Second Charge Mortgage?

You might find a second charge suitable if:

• your mortgage has ERCs (early repayment charges)
• you have a great deal on your current mortgage that you don’t want to lose
• you can’t get a further advance from your existing lender
• you are struggling to obtain some form of unsecured borrowing

If any of these sound like you, then working with a second charge mortgage broker is the best way to get the funds you need.

What can you use a second mortgage for?

The money you raise can be spent on pretty much anything, as long as it is legal.

• Home improvements
• Home extensions
• New car
• Family holiday
• Property investment
• Consolidation of existing debts
• Accessing funds to help children with a deposit for their own home

Do You Need a Mortgage Broker for a Second Charge Mortgage?

While you technically don’t need a mortgage broker to apply for a second charge mortgage, it’s highly recommended. Without one, you’ll be responsible for finding the right lender and product for your needs, as well as dealing with all the paperwork involved

Taking out a second charge loan for homeowners on their own may be difficult. It’s not clear who will lend to whom and how the application process works, making it hard to know where to start. Then there’s the question of what documents you will need to apply for a secured loan.

Occasionally your main lender will refuse to give permission for the new loan. Experienced brokers will be able to approach certain lenders who can accept an equitable charge instead.

Truthfully, it is a minefield without someone who knows what to look for. You could end up in a much worse situation with an overly expensive loan.

What is a Second charge mortgage broker?

A second charge mortgage broker is a specialist who will help you find and apply for a second mortgage. This type of loan is often used when people have equity in their home but can’t get a traditional mortgage because of an adverse credit history.

Second charge mortgages are also known as “secured homeowner loans” or “second mortgages”. They are a way of borrowing money against the value of your property, using your home as security, and an alternative to a remortgage.

The main difference between a first and second charge mortgage is that the second charge sits behind the first in terms of priority for repayment. This means that if you default on your mortgage, the lender of your first charge mortgage will be repaid before the lender of your second charge mortgage.

Remortgaging

A secured loan can affect your ability to remortgage, depending on the lender. Some lenders will not allow you to register another charge on the property at the same time as they grant you a mortgage. Others are more lenient, but may have stricter eligibility criteria. It’s important to research all of your options before making any decisions.

What do second charge mortgage brokers do?

Brokers that offer second charge loans sit between you and the lender as a go-between or intermediary. They are responsible for sourcing and recommending a suitable second mortgage from those available.

Additionally, now that second mortgages are regulated by the FCA your adviser will need to provide a comparison between a remortgage and a second charge loan.

Once a lender has been chosen your broker will assist with the application and any chasing required until the loan is paid out.

Debt consolidation can help you clear debts and re-organise your finances. However, it’s important to note that you could end up paying more interest overall with a debt consolidation mortgage, than if you had continued to manage your unsecured debts, as the mortgage will be spread over a longer term.