Can I take out a second charge mortgage for house renovations?

Yes, you can take out a second charge mortgage for house renovations.  

Second Mortgage for Renovations 

A second charge mortgage, or secured loan as they are also known, can be a useful way to raise finance if your current lender is unable to increase your existing mortgage or if you don't want to remortgage as you would lose your preferential rate. We would need to know the all the details around your financial situation before we proceed. We would need to complete a ‘fact find’ exercise and identify and establish whether a second charge loan is the best option for you rather than a remortgage. 

Second Charge Mortgages 

A second charge (or secured loan) mortgage is a loan that that uses your home as security, in addition to your existing mortgage. You now have two mortgages on your home; however the main mortgage will always take precedence over this second mortgage. Since March 2016, lenders have become more stringent in terms of criteria, affordability and stress testing, during the underwriting process. A typical timeframe to complete a secured loan is 3 to 4 weeks, however less complicated transactions can be done within 10 days if no full valuation is required. 

Here are some key points to consider: 

1. Purpose - second charge mortgages can be used for various purposes, including home renovations and improvements. Whether you want to renovate your kitchen, add an extension, or make other upgrades to your property, a second charge mortgage can provide the funds you need  
2. Loan amount - the amount you can borrow with a second charge mortgage depends on factors such as the equity in your property, your income, and your credit history. Lenders typically offer loans ranging from a few thousand pounds to several hundred thousand pounds, depending on your individual circumstances  
3. Interest rates - interest rates on second charge mortgages may be higher than those on first charge mortgages, as they represent a higher risk to the lender. However, rates can vary depending on factors such as your credit score and the loan-to-value ratio. It's essential to compare rates from different lenders to find the best deal  
4. Repayment terms - second charge mortgages typically have longer repayment terms than unsecured loans, often ranging from five to 25 years. You can choose between fixed-rate and variable-rate loans, depending on your preference and financial situation  
5. Secured debt - it's important to remember that a second charge mortgage is a form of secured debt, meaning your property serves as collateral for the loan. If you fail to keep up with repayments, you could risk losing your home. Make sure you can afford the monthly payments before taking out a second charge mortgage  
6. Legal process - like with a first mortgage, taking out a second charge mortgage involves a legal process, including valuation and conveyancing. You'll need to provide documentation and undergo a credit check as part of the application process  

Before taking out a second charge mortgage for house renovations, it's essential to carefully consider your financial situation, including your ability to repay the loan, and explore alternative financing options if necessary. Additionally, it's advisable to seek advice from a mortgage broker like John Charcol who can help you find the most suitable solution for your needs. 

We can help you make the decision and that you would certainly benefit from speaking to one of our independent mortgage advisers.  

Please call 0330 433 2927 or enquire now for more information on second charge mortgages.