Product of the Week: second charge mortgage for home improvements

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What do you do when you need to borrow more money against your property—perhaps for home improvements—but are already tied into a mortgage product? It’s a predicament many homeowners have faced. In an ideal world, your current lender would let you borrow more—but there are many circumstances in which this won’t happen.

If you’re currently tied into a fixed period of a product, you may face an early repayment charge (ERC) if you remortgage. Alternatively, you may not be able to borrow more from your current lender, as this could take you outside of their affordability criteria.

Fortunately, there is a solution. A second charge mortgage is a loan for which you have offered security such as your property. These can be taken out to consolidate debt or, as is commonly the case, can be used to fund home improvements. At Enness, we work with a lender who is currently offering second charge mortgages up to 65% of your property value. This product is ideal for anybody who is in a tie-in with their current mortgage, and are looking for additional borrowing.

As this would be a second charge on the property, you could borrow more whilst avoiding ERCs on your first charge mortgage. Second charge mortgage lenders also generally use more generous affordability checks, allowing you to borrow more than you could from a standard lender. Furthermore, many standard lenders don’t allow for large amounts of debt consolidation; this product can be used for this purpose.

  • Up to 65% of the property value
  • 3.73% lifetime variable rate
  • No ERC
  • Lender arrangement fee added to the loan

With this product, you could borrow more, then remortgage both the first charge and consolidate the second charge when the ERC on your first charge mortgage ends. This is particularly appealing for those who have borrowed to fund home improvements, as you may have increased your property’s value and thus may be in a lower loan to value bracket. As an additional bonus, the lender arrangement fee of £745 can be added to the loan so there is no need to pay this upfront.

If this sounds like a product that would benefit you, I would be delighted to discuss this product with you further.

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