If you're a homeowner, second charge loans can be a way to borrow money which is secured against your property.

Whether it's an emergency, or a once in a lifetime opportunity, the appeal of these loans is that they are not tied to your first mortgage, meaning if you take one out you don't need to remortgage. We explain more about how these loans work and things to consider before applying for one below.

Second charge loans could be the perfect option if you just need further security for something you already own, topping up your existing loans with the knowledge that you can get more equity released via another lender. DAS will take you through the process of obtaining a second charge loan on your property, whether it’s a Buy To Let, commercial investment or residential property, allowing you to raise much needed capital for further investment, refurbishments etc.

How we can help with Second charge loans

• Loans from £25,000
• Up to 80% LTV (higher if additional security is provided)
• You must be a homeowner/investor although you do not necessarily need to live in the property
• Secured against residential, commercial and buy to let properties
• You must have equity available in your property to secure the loan against
• Funds for any business purpose
• Security in the form of a second charge
• Competitive rates
• Loans to individuals, limited companies and SPV’s
• Overseas applications acceptable

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A second charge loan is a type of loan secured against your property.

A second charge loan is a type of loan secured against your property. If you're thinking about taking out a second charge loan, there are some things you need to know:

• It's important to be aware that second-charge loans are not available for all properties and may only be used to borrow money up to 75% of the value of your home (or other assets). This means if your property is worth £100k, then it would have to be worth at least £75k before we could lend on it.
• Second charge loans are secured against your property - this means if you don't keep up with repayments, we can take possession of the asset using legal process. If this happens we'll sell the asset (your house) and get some or all of our money back from its value.

You can consider a second charge loan if you are a homeowner, and you need to borrow money but don't want to remortgage.

If you're a homeowner and you need to borrow money, but don't want to remortgage your home or sell off any assets, then a second charge loan is worth considering.

The interest rate on second charge loans is usually higher than the first mortgage or secured loan, as the first mortgage takes priority when it comes to repaying the debt.

Second charge mortgages are more expensive because they are secured against your home and therefore have a lower risk profile than unsecured borrowings such as credit cards or personal loans. However, there is still some risk involved in lending money to you: if you don't pay your monthly payments on either your second charge mortgage or secured loan and instead keep using them for day-to-day living expenses, your mortgage provider may be forced to take possession of your property in order to cover their losses. 

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Second charge loans are an option for people who don't want to remortgage.

A second charge loan is an option for people who don't want to remortgage their home. If you have a first mortgage, or if you're struggling with arrears on your mortgage, a second charge loan can help you raise money without selling your property.

Second charge loans are usually for smaller amounts than first mortgages and are designed to be paid off when the first mortgage is paid off. The amount that the lender will lend will depend on the value of your property and whether there's equity in it (the difference between its current market value and what you owe).

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Conclusion

Second charge loans are an option for homeowners who want to borrow money without remortgaging. They may be suitable if you can’t get a better deal on your remortgage, or if you don’t want to change your existing mortgage. However, secured loans will only be an option if your home is worth enough and you have sufficient equity in the property.

One of the key differences between second charge loans and remortgages is that secured loans offer fixed interest rates - this means that even if the lender's interest rate changes, yours shouldn't. In comparison with first mortgages, however, they may cost more because borrowers usually have less time over which they repay their debt: typically 5 years rather than 25-30 years (although there's also no early redemption fee).

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Chat with the DAS team today to find out more.