Second charge
mortgages

A second charge mortgage is a secured loan against a client's property, that gives them access to the equity they hold in it. As such, it is only available to property owners. It’s called a ‘second charge’ mortgage simply because the primary mortgage on a property is referred to as the ‘first charge’ mortgage.

Second charge mortgages offer speed of completion when compared to remortgaging or a further advance. They allow a flexible approach to customer circumstances and offer more generous income multiples than other forms of finance too. Unsecured loans are typically capped at approximately £35,000, but second charge mortgages do not have these restrictions.

Any property-owning individual can apply for a second charge loan with Enterprise.

Where a second charge mortgage is used to buy property, the borrower can apply for:

• Up to 100% loan-to-value on residential properties
• Up to 75% loan-to-value for clients with credit problems

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The following properties can be used against an Enterprise Finance second charge loan:

• A primary place of residence
• Buy-to-let properties
• Commercial properties

There are many reasons you might consider a second charge mortgage for your client. These commonly include:

• They want or need to consolidate other debts
• They require access to funds but have a bad credit rating
• They need to raise capital quickly (with Enterprise, second charge loans are typically completed in around three to four weeks from application)
• They want to avoid paying an early repayment charge on an existing mortgage
• The interest rate on their current mortgage is attractive and they do not want to lose it by remortgaging
• They require funding for home improvements
• Their business needs extra funding (something many mortgage lenders are not willing to consider with remortgaging)
• They need to pay a tax bill
• They have to pay school fees
• They want to raise a deposit to buy an investment property

Enterprise Finance covers all up front costs associated with setting up a second charge mortgage secured against a residential property (including the valuation costs). The costs are only payable by the client if the loan completes. Clients do have the option to pay some or all costs upfront or add these to the loan amount, subject to affordability.

Our team of mortgage advisors is experienced in assessing loan applications, and therefore will let you know whether a loan application is likely to succeed before an application is even processed. This way we are able to manage expectations and save you and your client time and money.

When arranging a second charge mortgage on a BTL property, the client will pay for their own valuation.

Our experience means that in most cases we will be able to confirm almost straightaway whether your client’s application is likely to be successful.

From the initial enquiry to completion, our average turnaround time for a second charge mortgage is three to four weeks.

The repayment term can be anywhere from five to 30 years.

Both interest-only and repayment options may be available depending on the client’s circumstances.