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Specialist Mortgages

City Street
What is a Second Charge Mortgage?

A second charge mortgage is a type of subordinate mortgage made while an original mortgage is still in effect. In the event of default, the original mortgage would receive all proceeds from the liquidation of the property until it is all paid off.


Since the second mortgage would receive repayments only when the first mortgage has been paid off, the interest rate charged for the second mortgage tends to be higher and the amount borrowed will be lower than that of the first mortgage.

A home owner may decide to borrow against his home equity to fund other projects or expenditures.


The loan he takes out against his home equity is known as a second charge mortgage, as he already has an outstanding first mortgage.


The second charge mortgage is a lump sum of payment made out to the borrower at the beginning of the loan. Like first mortgages, second mortgages must be repaid over a specified term at a fixed or variable interest rate, depending on the loan agreement signed with the lender.


The loan must be paid off first before the borrower can take on another mortgage against his home equity.

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