A second charge mortgage, also called a secured loan or homeowner loan, is a separate loan secured against your property that sits behind your existing mortgage. It lets you borrow, often to consolidate debt, without touching your current mortgage deal or rate. Your home is used as security for both loans, and it could be repossessed if you don't keep up repayments on either.
- A second charge mortgage (secured loan, homeowner loan) is a second, separate loan on your property, not a replacement for your existing mortgage.
- Your current mortgage stays exactly as it is, including its rate, so there's no early repayment charge to worry about.
- You make two separate mortgage payments each month once a second charge is in place, one to each lender.
- It's registered as a legal charge behind your first mortgage, which is why it's called a second charge.
How a second charge mortgage works
When you take out a second charge mortgage, sometimes called a secured loan or a homeowner loan, a second lender registers a legal charge against your property, behind the charge your existing mortgage lender already holds. That's where the name comes from: the first charge is your original mortgage, the second charge is the new loan sitting behind it.
Because it's a completely separate agreement from your existing mortgage, your current lender, rate and remaining term are untouched. You simply take on a second, independent monthly payment alongside your existing mortgage payment. The two lenders don't need to be the same, and in most cases they aren't, your second charge lender is often a specialist secured lending provider rather than your everyday mortgage bank.
If your property is ever sold, or if you fall seriously behind on payments and it's repossessed, the first charge lender is repaid first from the proceeds, then the second charge lender. That ordering is part of why second charge rates are usually a little higher than first charge mortgage rates: the second lender is taking on slightly more risk.
Why homeowners choose a second charge mortgage over remortgaging
The most common reason is protecting a good existing mortgage deal. If you're part way through a fixed rate, remortgaging to raise money usually means paying an early repayment charge, sometimes several thousand pounds, to leave that deal early. A second charge mortgage avoids this entirely, because your first mortgage is never touched or replaced.
It can also be a practical option if your income or credit history has changed since you took out your original mortgage in a way that might make a full remortgage harder to arrange, since second charge lenders assess your current second-charge application on its own affordability terms, sometimes with more flexibility around credit history than a mainstream first-charge remortgage lender.
The trade-off is that second charge rates are typically higher than a remortgage rate, and you're managing two payments instead of one. Whether that trade-off is worth it depends on the size of your early repayment charge, how much longer your current deal has to run, and how the total cost compares to a remortgage. This is exactly the kind of comparison a broker will run for you.
What a second charge mortgage typically costs
Rates and terms vary by lender, your loan-to-value and your credit history, but it's useful to see the numbers laid out. Below is a worked example using fixed illustrative figures, not a live quote.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
| Amount | |
|---|---|
| Current monthly payments (credit cards and a personal loan) | £410/month |
| New second charge mortgage payment (£18,000 at 7.9% over 15 years) | £169/month |
| Total repayable over the 15-year term | £30,420 |
As with any consolidation route, the monthly figure drops noticeably, but the total repaid over the full term is higher than the original £18,000 borrowed, because it's being repaid over a much longer period than the original credit agreements would have run for. Your broker will always show you this comparison before you commit to anything.
What lenders look for
Second charge lenders look at two main things: how much equity sits behind your existing mortgage, and whether you can afford the new payment on top of your current one. Equity is your property's value minus everything already owed against it, including your first mortgage. Affordability checks look at your income and your outgoings once the new second charge payment is added, similar to how any mortgage affordability check works.
Most lenders in this market will also want your existing mortgage payments to be up to date, and many will consider applicants with a mixed or adverse credit history, sometimes including defaults, missed payments or a CCJ, though the rate offered will typically be higher to reflect that. There's more detail on this in our bad credit hub.
How the application process works
The process usually starts with a broker gathering some basic details about your property, your existing mortgage, and how much you want to borrow. They'll compare second charge lenders against remortgage options, and talk you through the real cost of each, not just the headline rate. Checking your options this way will not affect your credit score.
If a second charge mortgage looks like the right fit, you'll submit a full application, which includes an affordability assessment, a valuation of your property, and formal consent from your existing mortgage lender to register the new charge. Most straightforward second charge applications complete within a few weeks, though this varies by lender and how quickly documents come back. Your broker will keep you updated at each stage rather than leaving you to chase progress yourself.
A second charge mortgage may not be the right choice if your existing mortgage deal has already ended, or is ending soon, in which case a full remortgage might get you a lower overall rate with no early repayment charge to avoid. It's also worth thinking twice if the amount you want to borrow is small, since the fees involved (valuation, legal, broker or lender fees) can eat into the saving when set against a modest sum. And if you're already finding your current mortgage payment difficult, adding a second secured payment on top is unlikely to help; speaking to a free debt advice charity first is usually the better next step.
Worried about debt? Get free advice first
If you're struggling, it's worth speaking to a free, impartial debt advice service before you borrow more. They don't sell anything and won't judge your situation.
- MoneyHelper: Free, impartial debt advice backed by government
- StepChange: The UK's largest free debt charity
- Citizens Advice: Free, confidential advice on debt and money
Checking your options with Equiclear will not affect your credit score.
Frequently asked questions
Is a second charge mortgage the same as a secured loan?
Yes. Second charge mortgage, secured loan and homeowner loan all refer to the same product: a second loan secured against your property, sitting behind your existing mortgage.
Can I have a second charge mortgage with a different lender to my main mortgage?
Yes, in fact this is the norm. Your second charge lender is very often a different, often specialist, lender from your main mortgage provider, and the two agreements are entirely separate.
Does my main mortgage lender need to agree to a second charge?
Usually your existing lender's consent is required as a formality, since they hold the first charge, but this is a standard part of the process that your broker and solicitor handle on your behalf. It rarely causes a problem if your mortgage payments are up to date.
What happens to the second charge if I sell my house?
Both loans are repaid from the sale proceeds, the first charge mortgage first, then the second charge. Any money left over after both are cleared is yours.
Is a second charge mortgage more expensive than a first mortgage?
The interest rate is usually somewhat higher than a typical first-charge mortgage rate, reflecting the lender's position behind your existing mortgage. Whether it works out more expensive overall than remortgaging depends on your existing deal's early repayment charge, which a broker will factor into the comparison.
Can I get a second charge mortgage with bad credit?
Often, yes. Many second charge lenders specialise in lending to homeowners with defaults, missed payments or a CCJ, usually at a rate that reflects the extra risk. Having equity in your home matters as much as a perfect credit file in this part of the market.
How long does a second charge mortgage take to arrange?
It varies by lender and how quickly your paperwork and valuation move, but second charge mortgages can often complete faster than a full remortgage, since your existing mortgage isn't being unwound or replaced.