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Second Charge Mortgages
A second charge mortgage is where the equity in your current home is used as security against another loan, and means having two mortgages against your home. This could be for anything upwards of £1,000, and is still subject to the usual affordability checks conducted against all mortgages. The second charge mortgage will be subject to the usual payment terms, with repossession a consequence if you default on the payments, and you will need to have enough equity in your property to cover the loan.
There are many uses to second charge mortgages. They can assist if you’re unable to obtain unsecured borrowing such as a personal loan, and it can be a cheaper option to remortgaging, allowing for a lower overall interest rate and no early repayment penalties. However, you should be aware that an second charge mortgage may run up to 25 years, and shouldn’t be used to consolidate small unsecured loans, as the amount of interest may be greater overall.
Types of second charge mortgage
- A fixed-rate mortgage gives fixed monthly payments for, typically, between 2-5 years, depending on your circumstances and agreement with the lender. You will benefit if the interest rate rises, but not if it falls. This type of mortgage is often better for first-time buyers as it offers more security.
- A tracker mortgage is aligned with a base rate, typically the Bank of England’s base rate, plus a pre-agreed mark-up. Your payments will rise and fall in line with this base rate. Those looking to remortgage from a fixed rate to a variable or tracker may benefit from better rates, but will have less security.
- A variable rate mortgage gives an interest rate stipulated by the lender. You would normally revert to this rate at the expiry of a fixed term, tracker or discount period. If your mortgage has reverted to a standard variable rate, there are normally lower cost solutions available.
- A discounted rate mortgage offers a discount on a certain interest rate, most commonly a lender's Standard Variable Rate. The discount can be for an introductory term of two, three or five years, or it could even be for the entire term of the mortgage (a lifetime discounted rate).
Your property may be repossessed if you do not keep up repayments on your mortgage.
This firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.
Why Aston & Co?
At Aston & Co we have the experience and the know-how to help you find the best second charge mortgage deal to suit you and your budget. Our friendly and professional advisors are on hand to guide and support you in your choices. Contact us today to discuss your needs and pave the way to your happy-ever-after.
