How a second charge mortgage works
A second charge mortgage, sometimes called a homeowner loan or secured loan, is a separate loan secured on your home alongside your main mortgage. Your main lender keeps the first charge, so if the property is sold, your main mortgage is repaid first and the second charge lender after that.
People use them to raise money without remortgaging, for example when their current mortgage has early repayment charges or a rate they want to keep. The amount you can borrow depends on the equity in your home, your income and your credit history.
The calculator treats it as a repayment loan. Each monthly payment covers that month's interest and pays off some of the loan, so the balance reaches zero at the end of the term. Interest is worked out monthly at one twelfth of the annual rate.
Worked example
Borrowing £50,000 at 8% over 15 years, the monthly payment is £477.83. Over the full term you'd pay £36,008.69 in interest, £86,008.69 in total.
Think carefully before securing debt on your home
Your home may be repossessed if you don't keep up repayments on a second charge mortgage. Spreading a debt over a long term lowers the monthly payment but can greatly increase the total interest you pay.
Lenders often charge arrangement, broker or valuation fees, which aren't included here. Compare the total cost with other options, such as a further advance from your main lender or a remortgage, before you decide.
Inputs for the second charge mortgage calculator
Amount to borrow
The amount you want to borrow on the second charge.
Interest rate (per year)
The annual interest rate on the loan. The rate shown is only an example, so enter the rate from your quote. Lenders may calculate interest differently, so your actual payments can differ slightly.
Term
How many years you'll take to repay the loan.
CALCULATOR QUESTIONS
Second charge mortgage calculator questions
How much would a £50,000 second charge mortgage cost each month?
At 8% over 15 years, the payment is £477.83 a month, with £36,008.69 in total interest.
What's the difference between a first and second charge?
The first charge is your main mortgage. A second charge is another loan secured on the same property, which is repaid after the first charge if the home is sold.
Can I lose my home with a second charge mortgage?
Yes. It's secured on your home, so the lender could repossess it if you don't keep up repayments.
Does this include fees?
No. It covers the loan repayments only. Arrangement, broker and valuation fees are extra, and some lenders let you add them to the loan, which means paying interest on them.