Second charge mortgages
Additional borrowing without necessarily replacing your existing mortgage.
Intra helps clients explore second charge borrowing where additional funds are required and keeping the existing first mortgage may form part of the wider strategy.
Existing mortgage
Can potentially remain
Additional borrowing
Secured separately
Additional secured borrowing
Raising more capital does not always mean replacing the first mortgage.
A second charge mortgage is a separate loan secured against a property alongside the existing first mortgage.
It may potentially be considered where additional funds are required but replacing the existing mortgage is not necessarily the preferred route.
The important comparison is not simply whether additional borrowing is available, but how the total cost and structure compare with alternatives such as further advances or remortgaging.
Why second charge borrowing may be considered
Additional borrowing can serve a range of purposes.
Any borrowing route needs to be considered against the existing mortgage, total cost, affordability and the purpose of the funds.
01
Capital raising
A second charge mortgage can potentially allow additional borrowing against a property while the existing first mortgage remains in place.
02
Home improvements
Clients may consider raising capital for qualifying refurbishment, renovation or improvement costs.
03
Business purposes
Additional secured borrowing may potentially be considered for permitted business-related purposes, subject to lender criteria.
04
Debt consolidation
In some circumstances, clients may consider secured borrowing to consolidate existing commitments, although this can increase the total cost of borrowing and requires careful assessment.
05
Retaining an existing mortgage
A second charge can sometimes be considered where replacing the existing first mortgage may not be the preferred route.
06
Complex income
Some specialist lenders may consider borrowers whose circumstances do not fit standard additional borrowing criteria.
Keeping the first mortgage
Sometimes the existing mortgage is an important part of the decision.
A client may have an existing first mortgage with terms they do not necessarily want to replace, or there may be costs associated with repaying it early.
A second charge can potentially allow that first mortgage to remain in place while additional borrowing is arranged separately.
This does not mean a second charge will automatically be cheaper or more suitable. The combined cost of both loans needs to be considered.
Review your options
Key comparison
Consider the combined cost of the existing first mortgage and the new second charge.
Compare the structure
Second charge or remortgage?
They achieve additional borrowing in different ways. The appropriate route depends on the overall costs and individual circumstances.
Affordability
The lender needs to assess the additional loan alongside your existing commitments.
A second charge creates an additional monthly commitment secured against the property, so affordability remains a central part of the lender's assessment.
Income, household expenditure, credit commitments and the existing mortgage payment can all be considered.
What lenders consider
Additional borrowing is assessed as part of the wider secured debt position.
The lender can consider the property, first mortgage, additional borrowing requirement, affordability and credit profile together.
01
Existing first mortgage
The current mortgage balance, lender, interest rate and remaining term all form part of the overall borrowing position.
02
Property value
The value of the property affects the total amount of secured borrowing that may potentially be available.
03
Borrowing purpose
The lender will normally want to understand what the additional funds will be used for.
04
Affordability
Income, expenditure and existing commitments are considered when assessing whether the additional borrowing is affordable.
05
Credit profile
The borrower's credit history can influence lender appetite, terms and the range of options available.
06
Overall cost
Fees, interest rate, term and the total amount repayable should all be considered rather than focusing only on the additional monthly payment.
Debt consolidation
A lower monthly payment does not necessarily mean a lower overall cost.
Consolidating shorter-term unsecured borrowing into a loan secured against a property can spread repayments over a longer period.
That can reduce the monthly commitment in some circumstances, but may increase the total interest paid and converts borrowing into debt secured against the property.
The total cost, repayment term and additional security risk should all be considered carefully.
Borrowing purpose
Why you need the additional funds matters.
Different lenders can have different criteria around how second charge funds may be used.
The lender will normally want the purpose to be clearly explained, and additional information may be required depending on the use of the funds.
The Intra approach
Compare the wider borrowing position before choosing the route.
A second charge should be considered alongside the existing first mortgage and other potential ways of raising the required funds.
Requirement
Understand
We establish the additional borrowing required, purpose of the funds, existing mortgage and wider financial circumstances.
Options
Compare
Your adviser considers whether a second charge or another borrowing route may be appropriate based on the overall circumstances.
Lender criteria
Research
We research relevant lender criteria around affordability, loan size, property value, credit profile and borrowing purpose.
Application
Apply
Once a suitable route is agreed, the case is prepared with the required financial and property information.
Completion
Manage
Our team supports the case through underwriting, valuation where required, legal documentation and completion.
Lender access
Specialist lenders can take different approaches to additional secured borrowing.
Lender appetite can vary according to affordability, credit profile, property value, borrowing purpose and the existing mortgage position.
Lender availability and suitability depend on affordability, property value, borrowing purpose, credit profile and individual circumstances.
Why Intra
Additional borrowing needs to make sense alongside what you already have.
The existing mortgage, purpose of the funds and overall repayment cost all need to be considered before selecting a route.
01
Review the first mortgage
We consider the current balance, rate, term and relevant costs associated with the existing mortgage.
02
Understand the requirement
We establish the additional borrowing required, purpose of the funds and desired repayment structure.
03
Compare potential routes
Where relevant, a second charge can be considered alongside alternatives such as further borrowing or remortgaging.
04
Manage the application
Our adviser and administration team support the case through lender assessment, documentation and completion.
Related borrowing
Explore related mortgage and property finance.
Existing mortgage
Remortgages
Review an existing mortgage and explore replacement borrowing based on your current circumstances.
Investment property
Property Refinancing
Review or restructure borrowing secured against qualifying investment property.
Short-term finance
Bridging Finance
Short-term property finance for qualifying purchases, refinancing and other time-sensitive requirements.
Frequently asked questions
Questions about second charge mortgages.
These answers are general. Available borrowing depends on affordability, property value, the existing mortgage and lender criteria.
01What is a second charge mortgage?
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What is a second charge mortgage?
A second charge mortgage is additional borrowing secured against a property that sits behind the existing first mortgage. The original mortgage usually remains in place while the second charge is repaid separately.
02Why might I consider a second charge instead of remortgaging?
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Why might I consider a second charge instead of remortgaging?
A second charge may potentially be considered where keeping the existing first mortgage is important, for example because of its current terms or potential early repayment charges. Whether that is appropriate depends on the overall cost and circumstances.
03How much can I borrow with a second charge?
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How much can I borrow with a second charge?
The amount available depends on factors including property value, existing mortgage balance, affordability, credit profile, borrowing purpose and lender criteria.
04Can a second charge be used for home improvements?
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Can a second charge be used for home improvements?
Potentially. Some clients use secured borrowing for qualifying renovation or improvement costs, subject to affordability and lender criteria.
05Can a second charge be used for debt consolidation?
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Can a second charge be used for debt consolidation?
Potentially, but consolidating unsecured borrowing into debt secured against a property can increase the repayment term and total amount repaid. It requires careful consideration of the costs and risks.
06Can self-employed borrowers get a second charge?
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Can self-employed borrowers get a second charge?
Potentially. Specialist lenders may consider a range of income structures, including self-employed applicants, subject to affordability and evidence requirements.
07Does my existing mortgage lender need to agree?
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Does my existing mortgage lender need to agree?
Requirements vary. The second charge lender will need details of the existing first mortgage, and some cases may involve consent or notification requirements depending on the lenders and mortgage terms involved.
08Are second charge mortgages regulated?
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Are second charge mortgages regulated?
Many second charge mortgages secured against a client's home are regulated by the Financial Conduct Authority. The regulatory position depends on the property, purpose and individual circumstances.
Mortgage availability and suitability depend on individual circumstances and lender criteria. The regulatory status of a transaction depends on the property, purpose and circumstances involved.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or other loan secured upon it.
Second charge mortgages
Discuss the additional borrowing you need with an Intra adviser.
Tell us about your existing mortgage, the funds you need to raise and what the borrowing is intended to achieve.
enquiries@intra-pf.com