A second charge mortgage is a loan where you use the equity you have in your home as security. It basically means you’ll have two mortgages running on your home.
Equity is the percentage of your property owned outright by you, which is the value of the home minus any mortgage owed on it. A second charge mortgage allows you to use equity in your home as security against another loan.
You need to be a homeowner to take out a second charge mortgage, but you don’t need to live in the property. This means if you’re a landlord, then you may be able to use your rented property against your loan.
But just like any mortgage, if you fail to keep up with the payments then you run the risk of losing your home. Your initial mortgage always takes precedence over a second charge one in these scenarios.
Remortgaging can be a great way to reduce your monthly repayments, take some cash out of your home for a big purchase, or pay off your debts.
Remortgaging is a similar process to standard mortgages, but the process can be slightly different.
In this Guide, you’ll find the need-to-knows about remortgaging, and a step-by-step guide to how you can do it.
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