A second mortgage or a second charge mortgage?
July 13, 2017 by Brendan O'Neill
Advice & Tips
People often confuse second charge mortgages with a second mortgage, but they are completely different.
A second charge mortgage is a loan taken out using your current home as security, in addition to the mortgage you already have on your home. If you are thinking of buying a holiday home or a second property, you will apply for a second mortgage.
A second mortgage will be treated separately to your existing mortgage, and you will have to go through the affordability and credit checks again. Property acts as security for both types of loan, so it is crucial not to miss any repayments. In addition, if you do experience financial difficulty and have to miss repayments, you may find it difficult to remortgage to another deal, as your credit record will be affected.
Before applying for a second mortgage, or a second charge mortgage, it is important to make sure that you can afford the extra payments every month, as your property will be at risk. A second mortgage is generally cheaper than a second charge mortgage, although you will still be required to provide a deposit on the second home.
If you are considering either a second charge mortgage or a second mortgage, it is advisable to speak to a CeMAP qualified mortgage advisor, so that they can provide details of the lender most likely to approve your mortgage application. Be prepared to provide details of all income and expenditure to a lender during the application process.
Written by
Brendan O'Neill
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