How to Manage a Second Charge Mortgage



Second charge mortgages are only available to homeowners with a mortgage as the loan is secured against their home. This could make them a better option for bigger purchases such as a new kitchen or extension, because you can usually borrow a higher amount over a longer period compared to its unsecured alternative.

To avoid your Second charge mortgage and repayments getting out of hand it is vital you manage the whole process well.

What to Borrow

Before opting for a Second charge mortgage it is advisable to create a budget, working out exactly how much money you need to cover all costs. You may discover that by cutting back on a few spending excesses and dipping into savings, that taking out a loan isn?t necessary. This is the best choice, when available, as no interest will need to be paid. There are other finance options available such as a personal loan or credit cards.

However, if this isn?t an option, working out a budget is still required to manage repayments, see where every penny of the borrowed money goes and how much is required in total. This will be vital for meeting the monthly repayments.

What it Costs

In total a second charge mortgage will cost more than just the initial amount borrowed due to interest. A Second charge mortgage from Nemo, for example, is available over a term of 3 to 25 years at a rate of typical 6.9% APR variable, rates stated correct as of 22nd April 2015. While the chance to make repayments at a smaller cost over a longer period may seem tempting, in total this will work out more expensive in the long run. Remember, a Nemo loan is secured against your home so you must make sure you can afford the repayments or your home may be repossessed.

Making Repayments

The ultimate consequence of not being able to repay your Second charge mortgage on time is that your home could be repossessed. However, for many lenders it is far less profitable to repossess your home than receive debt repayments. If you do get behind, notify the lender as soon as possible and they may be willing to rearrange your repayment plan.

Through detailed budgeting from the offset and sticking to it, repaying the Second charge mortgage should be simple.


Please enter your comment!
Please enter your name here