If you need extra money but want to keep your current mortgage, a second charge loan without remortgaging could be the right choice. This loan lets you borrow money secured against your home without switching your mortgage. It is especially helpful if you have a fixed-rate mortgage and want to avoid early repayment charges on a fixed mortgage. Instead of remortgaging, you get quick access to funds.
Why Use a Second Charge Loan?
There are many reasons to get a secured second charge loan on your property:
- Avoid Early Repayment Charges on Fixed Rate Mortgages: If your mortgage is fixed, changing deals early can cost a lot. A second charge loan lets you borrow money without paying these fees.
- Home Improvement Loans Secured on Property: Need to fix or improve your home? Use this loan to pay for renovations, new kitchens, or repairs.
- Debt Consolidation Loans Secured on Home: Combine your debts into one loan to make payments easier.
- Second Charge Loans for University Fees: Help pay for university tuition or living costs with this loan.
- Buy-to-Let Property Deposit Loan: Planning to buy a rental property? A second charge loan can help with the deposit.
Income and Employment Requirements
Lenders check your income and job status when you apply for a second charge loan for employed and self-employed applicants. If you work for a company, you will need to show payslips and proof of work. If you are self-employed, lenders usually ask for at least two years of accounts or tax returns. They may also consider pensions or rental income to make sure you can afford repayments.
Costs and Fees for Second Charge Loans
Before you apply, know the costs and fees associated with secured second charge loans. These may include:
- Arrangement Fees for Second Charge Loans: A setup fee that can be a fixed amount or a percentage of the loan.
- Property Valuation Fees: Your home must be valued. The fee may be paid upfront or added to the loan.
- Legal Fees for Secured Loans: Because this loan is secured on your property, legal work is needed. Sometimes these fees are included in the loan.
- Early Repayment Charges on Second Charge Loans: Some loans charge fees if you repay early. Check the loan terms carefully.
How Does a Second Charge Loan Work?
A second charge loan is secured on your home but ranks behind your main mortgage. This means your primary lender is paid first if you sell or refinance. You can repay your loan in two ways:
- Capital and Interest Repayments: You pay back the loan plus interest each month until it’s fully repaid.
- Interest-Only Repayments: You pay just the interest monthly but must have a clear plan to repay the loan amount at the end of the term.
Important Things to Remember
If you choose interest-only payments, make sure you have a plan to repay the loan at the end. Also, second charge loans beyond retirement age are available, but you need to show that you can afford repayments on your retirement income or other money sources.
Why Choose Orchard Mortgage Solutions?
At Orchard Mortgage Solutions, we give expert advice on second charge loans tailored to your needs. Our friendly team will guide you through the process and help you find the best loan option with clear terms and competitive rates.
Contact Orchard Mortgage Solutions today to discover how a second charge loan can help you fund home improvements, consolidate debt, support university fees, or finance a buy-to-let deposit—without remortgaging.
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