Second charge mortgage to reduce monthly payments

A client of mine recently refurbished his property in order to increase the value from £1.3 million to £2 million, however, halfway through he realised it was going to cost him an extra £290,000, of which he didn’t have.

Panic mode set in and my client proceeded to borrow on approximately 10 different credit cards, 3 personal loans as well as a large sum from his father-in-law.  This unfortunately resulted in him paying £7,000 a month in unsecured debt, on top of the £4,000 per month he was already paying for his mortgage.

This undoubtedly left him in a big dilemma, with a mortgage balance of £925,000 and a total of £11,000 debt to pay each month.

When approached by this client, my initial thought was to suggest a remortgage to then consolidate the debt into a standard mortgage, as this would work out much cheaper. However, the amount of unsecured debt had significantly impacted my client’s credit file and made it pretty much impossible to secure lending. No lender was willing to accept his case due to the worry he would just keep borrowing, and even his current lender would not give him a further advance.

This meant my client was left with numerous credit cards soon to end their zero-rate period, of which he’d have to start paying very large interest rates on.

Essentially, my client needed to secure down everything on a new loan, so I recommended to take out a second charge mortgage instead. Second charge lenders are generally more lenient with credit scores, and he also had a decreasing bonus, which would prove an additional problem for first charge lenders.

Luckily, I was able to consolidate the mortgage payments for both the second charge and main mortgage which came to just £5,000 a month in total. This allowed him to save a huge £6,000 a month.


I secured a second charge loan with no early repayment charges, which meant my client would be able to remortgage both the second charge and first charge with a mainstream lender (with no early repayments), once he had less unsecured debt and his credit score could go back up. This would allow the rate to also go down to sub 2%, leaving my client second charge and debt free.

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