What is the difference between a second charge and a remortgage?
A remortgage replaces your existing mortgage with a new, larger one. A second charge mortgage is a separate loan secured on your home, sitting behind your first mortgage. Your existing mortgage stays exactly as it is.
A further advance is extra borrowing from your current lender, usually on new terms for the extra amount. All three are secured on your home. Your home may be repossessed if you do not keep up repayments on any of them.
People raise money for many reasons. Common examples include home improvements, helping a child with a deposit, buying out a former partner, business needs or paying a tax bill. The purpose can affect which lenders will help, so be clear about it from the start.
When might a second charge make more sense?
A second charge can make sense when changing your main mortgage would be expensive or difficult. Common situations include:
- Early repayment charges: your fixed rate still has years to run and leaving would trigger a large charge.
- A low existing rate: you want to keep it rather than move the whole balance to a new rate.
- Changed circumstances: your income type or credit record has changed, so remortgaging is harder.
- Speed or simplicity: you need a defined sum for a specific purpose.
Second charge lenders may consider a wider range of credit histories and income types than some mainstream lenders.
For example, imagine you fixed for five years two years ago, at a rate lower than today's deals. Remortgaging the whole balance could mean paying an early repayment charge and a higher rate on all of it. A second charge only affects the new money, which may cost less overall. The numbers differ for everyone, so always compare.
When is remortgaging usually better?
Remortgaging is often better if your current deal is ending or has no early repayment charge. Rolling everything into one new mortgage can mean a single payment and, sometimes, a lower overall cost. It may also be simpler to manage.
But moving your whole balance to a new rate may cost more if your existing rate is low. Compare the blended cost of keeping your current mortgage plus a second charge against one new loan. Our remortgage page explains the process.
What about a further advance?
Ask your current lender about a further advance first. It may be quick, and some lenders offer competitive terms for extra borrowing. The extra amount usually has its own rate and term, alongside your existing deal.
Your lender will check affordability again. If they decline or offer less than you need, a second charge or remortgage may be the alternative. A broker can compare all three options side by side.
Not every lender offers further advances, and some only lend for certain purposes, such as home improvements. The new rate may differ from your main deal and may have its own end date, which can make future remortgaging more complex.
What does a second charge cost?
Second charge mortgages can carry higher rates than first mortgages, as the lender ranks second in line. Fees may include a lender fee, a broker fee and a valuation. Some fees can be added to the loan, which increases the interest you pay.
Lenders usually look at your combined loan-to-value, which is your first mortgage plus the new loan, against the property's value. Many lend up to around 75% to 85% combined, and sometimes more. Terms typically run from a few years to around 30 years.
Should I use a second charge to consolidate debts?
Consolidating debts into a secured loan can reduce your monthly payments, but it can cost more overall. Short-term debts such as credit cards are spread over many years. Unsecured debts also become secured on your home.
Think carefully before consolidating. Consider whether your spending habits will change, and look at the total amount repayable. Free debt advice is available from MoneyHelper if you are struggling. Second charge mortgages on your home have been regulated by the FCA since 2016.
How do I decide?
Gather your current mortgage details: balance, rate, end date and any early repayment charge. Decide how much you need and over what term. Then compare the total cost of each option, not just the monthly payment.
OMB compares remortgages, further advances and second charge mortgages across the market. See our second charge mortgages page to learn more.
Taking advice before you borrow can help you avoid paying more than you need to.
Second charge mortgagesBorrow against your home's equity without changing your existing mortgage deal.
Explore second charge mortgagesFrequently asked questions
Is a second charge mortgage the same as a secured loan?
Yes, broadly. A second charge mortgage is often called a secured loan or homeowner loan. It is secured on your home behind your main mortgage. On your own home it is regulated by the FCA. Your home may be repossessed if you do not keep up repayments.
Do I need my lender's permission for a second charge?
Your first mortgage lender is usually notified, and some lenders' terms require their consent. In practice, consent is often given. Your broker or solicitor will check what your mortgage conditions require. The second charge lender will usually handle the notification as part of the process.
How much can I borrow on a second charge?
It depends on your income, credit history, equity and the lender. Loans commonly range from around £10,000 to £1m or more. Many lenders cap combined borrowing at around 75% to 85% of the property's value. Affordability checks apply, as with any mortgage.
Is a second charge cheaper than a remortgage?
Not always. A second charge usually carries a higher rate than a first mortgage. But it can be cheaper overall if remortgaging would mean a large early repayment charge or losing a low rate on your main mortgage. Compare the blended total cost.
Can I get a second charge with bad credit?
Possibly. Some second charge lenders consider applicants with past credit problems, depending on severity and how recent they are. Rates may be higher. Make sure you can comfortably afford the payments, as the loan is secured on your home. Compare all options first.
What happens to my second charge if I sell?
Both the first mortgage and the second charge are repaid from the sale proceeds. The first lender is paid first, then the second charge lender. Early repayment charges may apply to either loan, so check your terms before selling. Plan ahead.
Important: This guide is general information, not personal advice. Rules, rates and lender criteria change; speak to an adviser about your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.