What is a Second Charge Mortgage?
A second charge is a secured loan that sits behind a mortgage, taking “second” priority.
In order to qualify for this type of product, you must already own a property with a mortgage outstanding. However, the secured property does not have to be your residence, as our lenders can secure finance on buy-to-let and commercial properties as well as residential.
Second charge lending is incredibly flexible.
An alternative to remortgaging, this type of lending can be used for a variety of purposes:
- Business development
- Capital injections
- Home improvements
- Debt consolidation
- Wedding/Divorce funding
- Deposit raising for a property purchase
Product Panel Highlights
- Up to 95% LTV
- No max loan size
- Max term length 35 years
- Low income or poor credit accepted.
Example of Use
- £1.4m raised as a second charge on the client main residence for business purposes. This was done part serviced and part retained to meet the clients budget.
Key terms explained
- LTVA common calculation of debt and equity: loan amount divided by the property value.
- Regulated transactionsAny case involving the residence of the applicant is typically a regulated transaction. The Financial Conduct Authority have placed stricter criteria around these transactions to safeguard the customers involved.
- Term loanA term loan is a fixed loan amount that is expected to be paid that adheres on a fixed schedule. A monetary loan that is repayed regularly, over a set period of time.
- Exit routeThe means of paying off a bridging loan.
- Unsecured loanA loan secured against the credit of the applicant, rather than property collateral.
- AVM Automated Valuation Model uses mathematical modelling, as well as a property database to determine the value of a property without visiting it. The sale of previous properties and the area, historic fluctuation of pricing and house specific details provide a fairly accurate valuation for a fraction of the cost.
- Light refurbishmentAs a general rule, light refurbishment does not alter the structure of the property, and involved work costing less than 15% of the property value.
- Heavy refurbishment(Also known as renovation use of funds) Usually refers to altering the property’s structure. Extensions and demolitions are usually grouped into this category as well as work costing less than 15% of the property value.
- Draw downThe point at which the funds are released to the customer.