How a second mortgage works
A second mortgage, also called a second charge mortgage, is a loan secured on your home alongside your existing mortgage. Your first mortgage stays in place, and the second lender ranks behind it.
People use them to raise money without remortgaging, for example to avoid an early repayment charge on their current deal. Second charge mortgages are regulated by the Financial Conduct Authority.
Worked example
Borrowing £50,000 at 8% over 15 years costs £477.83 a month, £86,008.69 in total.
Interest on a second mortgage is usually charged monthly, but lenders vary, so check the quote for how interest and fees are applied.
Things to compare
Compare a second mortgage with a further advance from your current lender or a remortgage, including all fees. Rates on second mortgages are often higher than on first mortgages.
Because the loan is secured on your home, missing payments can lead to repossession, and the second lender can still pursue you for any shortfall after your first mortgage is repaid.
What this calculator assumes
The calculator treats the second mortgage as a single loan on one nominal rate for the whole term, repaid in equal monthly payments, with interest worked out monthly at one twelfth of the annual rate. The existing mortgage is not included, so add its payment to see your total monthly commitment.
It leaves out arrangement, broker and valuation fees and early repayment charges on either loan, so treat the result as a guide for comparing options rather than an offer.
Inputs for the second mortgage calculator
Amount to borrow
The amount you want to raise with the second mortgage.
Interest rate (per year)
The annual interest rate on your second mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Second mortgage calculator questions
What is a second mortgage?
A loan secured on your home in addition to your main mortgage. The main mortgage lender has first claim on the property; the second lender comes next.
Why choose a second mortgage instead of remortgaging?
It can let you borrow without leaving your current mortgage deal, which may avoid an early repayment charge or keep a low rate.
Are second mortgages regulated?
Yes. In the UK, second charge mortgages on your home are regulated by the Financial Conduct Authority.
What happens if I can't repay?
Missing payments on a loan secured on your home can put it at risk. Speak to your lender early if you struggle.