Second-Charge Mortgages – How They Work & When They Beat a Remortgage
(Tap your home’s equity without disturbing your first mortgage.)
Quick Summary
What they are: A separate secured loan that sits behind your existing mortgage and uses your equity as collateral.
Typical borrowing: £10k – £500k, up to 85 % combined loan-to-value (1st + 2nd).
Why choose one: Keep a great first-mortgage rate, raise funds when remortgage fees/ERCs are high, or when credit blips block a mainstream remortgage.
Costs: Rates from 6-11 % APR, 5-10 yr terms, 5-10 % of loan in fees rolled in.
Good for: Home-improvements, debt-consolidation, business capital, tax bills.
1 | Second Charge vs Remortgage
| Feature | Second-Charge | Remortgage |
|---|---|---|
| Touches first-mortgage deal? |  No |  Yes |
| Early-repayment charges (ERCs) on first loan | None | Payable if in fixed period |
| Max LTV | 85 % combined | 80-95 % but whole loan must fit |
| Speed | 2-4 weeks (no valuation in some cases) | 6-10 weeks |
| Credit score impact | Lender may be more flexible | Mainstream score rules |
| Typical uses | One-off cash while rates rising | Rate-shopping when ERCs £0 |
2 | Eligibility Checklist 
Homeowner with equity (e.g. £300k value, £180k mortgage → £120k equity).
First-mortgage lender gives consent to second charge (standard form).
Proof of income: 3 m payslips / 2 yrs SA302.
Affordability pass inc. new loan.
Satisfactory credit (but adverse considered by specialist lenders).
3 | Costs to Expect
| Cost | Range |
|---|---|
| Arrangement fee | 5-10 % of loan (often added) |
| Broker fee | £0-£2,995 (capped % of advance) |
| Valuation | £0 desktop – £300 survey |
| Legal / land-registry | £200-£600 |
| Interest | 6-11 % fixed or variable |
Still cheaper than unsecured loans/credit cards when borrowing £30k+.
4 | Popular Lenders & Sweet Spots
| Lender | Niche |
|---|---|
| Together Money | Manual underwriting, adverse credit OK |
| Pepper Money | Self-employed accepted with 1 yr accounts |
| Prestige Finance (OneSavings Bank) | Large loans £100k-£500k up to 85 % CLTV |
| United Trust Bank | 1-day CCJs/defaults considered |
5 | Application Timeline
Illustration & AIP – 24 h.
Document pack & lender consent – 3-5 d.
Valuation (if required) – 5-7 d.
Offer & completion – 10-20 d total.
6 | When a Second Charge Shines
Fixed-rate ERC on first mortgage is >£5k.
You’re locked into ultra-low 1.5 % fix until 2027.
Recent blip on credit report means high-street remortgage rejected.
You need funds within a month (e.g., extension builder deposit).
7 | Risks & Watch-outs
Higher rate than first mortgage.
Your home is at risk if you miss repayments.
Consolidating unsecured debt can extend repayment term and total interest. MaPS
8 | Next-Step Checklist
Check current mortgage balance & ERC.
Calculate combined LTV after your desired loan.
Download latest credit report.
Gather income proof & purpose of funds.
Speak to a specialist broker with whole-of-market second-charge panel.
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