We can secure second mortgages – call us today to find out more…
A second mortgage, also known as a second charge mortgage, is a loan that is secured against the equity in your property, on top of an existing mortgage. It allows homeowners to borrow money based on the value of their home, using it as collateral. The total amount is determined by the equity available in the property.
As a secured loan, a second mortgage allows borrowers to access a higher total amount than they might with an unsecured personal loan. Here at Greenacre Financial Services, we specialise in providing second charge mortgages to homeowners who wish to access funds for various purposes.
Why take out a second mortgage?
There are many reasons why individuals might consider obtaining a second mortgage:
- You may want to access significant funds for various purposes such as home improvements, debt consolidation, or other financial needs.
- If you are self-employed or facing challenges in securing unsecured borrowing, such as a personal loan, a second mortgage can provide an alternative avenue for accessing funds.
- If your credit rating has declined since obtaining your initial mortgage, refinancing your mortgage to include an additional loan could result in a higher interest rate on the entire new mortgage. Opting for a second mortgage allows you to pay the higher rate and extra interest solely on the newly borrowed amount, potentially saving you money on overall interest payments.
- If your existing mortgage carries a significantly high Early Repayment Charges (ERC), it might be more cost-effective to obtain a second charge mortgage instead of remortgaging to release equity from your property.
However, the suitability of these examples will depend on your individual circumstances. If you are up to date on your mortgage payments, it is advisable to explore the possibility of a further advance from your current lender, as it may offer more favourable terms and prove to be a better option for your specific needs. Contact us for a mortgage review to find out more.
NOTE: As a second charge lender and whole of Market mortgage broker, we secure second mortgages, offering expert advice on the different products available and associated interest rates.
How much can I borrow on a second mortgage?
The potential amount of a second mortgage is determined by the level of equity you have accumulated in your home. By using the equity in your property as collateral, a second mortgage allows you to secure an additional loan. Essentially, you will have two mortgages on your property.
Equity refers to the portion of your property that you own outright, calculated as the value of your home minus any existing mortgage(s). The specific borrowing limit set by a lender may vary, but as a guideline, accessing up to 90% of the equity in your property can provide you with an estimate of the potential loan amount.
FAQ: What if you move home? In the event that you decide to sell your home, it will be necessary to settle the outstanding balance of your second charge mortgage. Alternatively, if your lender permits, you may have the option to transfer the second mortgage to a new property.
Higher Interest Rates and Credit Scores
One key consideration when opting for a second mortgage is the higher interest rate compared to the primary mortgage. The interest rate is based on various factors, including your credit score.
A good credit score enhances the chances of securing a competitive interest rate, while a lower score may result in a higher rate. It is essential to review your credit score and improve it, if necessary, before applying for a second mortgage.
FAQ: When is a second mortgage not a good idea? While second mortgages can offer advantages, it is important to approach them as a significant decision due to potentially higher interest rates compared to first mortgages. Therefore, it is crucial to carefully consider the pros and cons before proceeding.
Early Repayment Charges (ERC)
Before proceeding with a second charge mortgage, it is important to consider the potential early repayment charges (ERC). ERCs are fees imposed by lenders if the borrower decides to repay the loan before a predetermined period. Greenacre Financial Services provides clear information regarding ERCs, allowing you to make informed decisions about the duration of the loan and the potential implications of early repayment.
NOTE: As with any mortgage secured on your property, failing to repay a second mortgage could mean you’ll lose your property.
How we can help you…
Here at Greenacre Financial Services, we are specialist mortgage advisors when it comes to finding and arranging both mortgages for domestic and commercial clients. Choosing us as your second charge mortgage lender will help you access funds based on the equity in your property. Rest assured, we operate under the regulation of the Financial Conduct Authority, ensuring a reliable and trustworthy lending experience.
For more information about any of our services, get in touch by calling us on 0203 3939 222 or email info@greenacrefs.co.uk.
