An increasing amount of Brits are taking out second charge mortgages but what are they, how can they be useful and what are the potential pitfalls?

Second charge mortgages are mortgages taken out alongside an original mortgage but with a different lender on different terms.

According to the Finance and Leasing Association, the number of Brits taking out this type of finance was 12% higher in the eight months to August 2025 than the same period in 2024.

“The market has grown sharply over the past two years, with total second charge lending up 16% year-on-year in 2024, reaching £1.7bn, and climbing a further 22% in 2025 up to October,” says Chris Meadows, mortgage director, second charge loans at Fluent Money.

Part of the reason for this growth is the climate of the UK mortgage market. Many people have fixed on low-rate mortgage deals with high early repayment charges and want to secure additional lending without losing these competitive rates or having to pay a penalty.

“Second charge mortgages are most suitable if you want to borrow a substantial amount, have decent equity in your property, and don’t want to or can’t remortgage,” says Fiona Peake, mortgages expert at Ocean Finance.

What are second charge mortgages?

Second charge mortgages are similar to standard mortgages in that they are a loan secured against your home. It's an additional loan alongside your existing mortgage and is a way to borrow against your home's equity without changing your primary mortgage

“A second-charge mortgage can be useful if you want to access extra cash and are comfortable having a second mortgage,” says Karen Barrett, founder of financial advice platform Unbiased.

They are a specialist product and don’t tend to be available via high street lenders. That said, there is still plenty of choice in the market.

“You'll be looking at around 20 to 30 in this space with the top players being the likes of United Trust Bank, Step One Finance, West One, Together Money, Norton Finance and Pepper Money,” says John Everest, director of Everest Mortgage Services.

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Terms can be anything from three to 30 years, depending on how quickly you want to pay your loan off, while rates are very much dependant on a customer’s credit rating and loan-to-value ratio.

“Rates are higher than first-charge mortgage rates because the lender is second in line for repayment,” says Richard Dana, founder of mortgage platform Tembo.

“Pricing varies by lender, credit profile, equity and income, but broadly falls in the region of 6-9% for strong credit, 9-12% for mid-credit, and higher for adverse-credit cases.”

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Like first charge mortgages, there’s repayment or interest only options.Second charge mortgages are mortgages taken out alongside an original mortgage but with a different lender on different terms.·Gary Yeowell via Getty Images

What are the advantages?

The main advantage – and the likely reason there’s been such a jump in second charges – is that customers can raise capital without changing the terms of their first mortgage, especially important if they are still lucky enough to be on a low fixed rate.

Another advantage is that second charges can be used to raise funds for a host of things, including home improvements, tax bills and debt consolidation; the only purpose you can’t use them for is to pay off gambling debts.

“[They] offer more flexible underwriting than traditional remortgages, which can help customers with complex income, bad credit, or non- standard circumstances,” says Meadows.

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This means that, when used properly, they help protect your credit rating, making your debts more manageable, and putting you in a better position for when you come to remortgage on your primary mortgage.

Another difference with traditional mortgages is the multiples you are able to borrow. “High street lenders typically lend 4.5-5x income; second charge lenders can go 6x plus lending, with one lender in the market that could go to even 8x income in certain cases,” says Everest.

Second charges often don’t have any or very large early repayment charges, so you have more flexibility when it comes to settling your debt too.

What to watch out for

One of the disadvantages of a second charge mortgage are the fees. “With a second charge mortgage, it’s worth stressing that you’ll have to pay fees, and you’ll likely pay more interest overall,” says Barrett.

These can include arrangement, legal and broker fees. “Lender’s fees range from 1-2.5% of the initial borrowing amount, however legal costs are usually included. Broker fees are typically higher [than mortgage broker fees], £1500-£3000, [as] the loan sizes are generally smaller than a mortgage,” says Everest.

There is also more paperwork than standard loans and a solicitor’s input. “They are not a ‘quick cash’ fix,” flags Peake. “They are more complicated than a personal loan, often requiring consent from your first mortgage lender and involving extra paperwork and legal steps.”

You will always need to check that your first charge mortgage lender is comfortable with you taking out a second charge. “Nine out of 10 lenders will require consent; a few lenders do not, for example Halifax. Some lenders in the buy-to-let space do not give consent, therefore you are unable to get a second charge added at all, eg The Mortgage Works,” says Everest.'A second-charge mortgage can be useful if you want to access extra cash and are comfortable having a second mortgage,' says Karen Barrett, founder of financial advice platform Unbiased.·MoMo Productions via Getty Images

It’s also important to think about whether you will be able to afford to repay two different mortgages and remember your home is at risk if you don’t keep up the repayments on both.

“Borrowers take on two secured commitments, which increases overall indebtedness and requires careful affordability assessment,” says Meadows.

Second charge mortgages are a specialist financial product and, while you will pay a fee, you should seek the advice of a knowledgeable broker who has experience in the second charge market.

“Before taking out a second charge mortgage, make sure the lender is regulated and you understand the repayment schedule… Getting professional advice or working through an experienced mortgage broker is essential, as second charge lending is specialist territory,” says Peake.

How do they compare to personal loans and remortgaging?

Second charge mortgages don’t work for every scenario and, often, it makes better financial sense to get a personal loan or to remortgage. If you’re borrowing less than £25,000, a personal loan, even if it has a higher interest rate, it likely to be preferable as it will be simpler to organise and come with fewer fees.

“A personal loan may be preferable for smaller borrowing needs, short-term finance, or where the borrower does not want to secure debt against their home,” says Dana.

Depending on where you are at with your first mortgage, remortgaging might make more sense. “[This] may be better when the borrower is near the end of a fixed rate, can access a competitive new rate, or wants to simplify finances into one loan at the lowest possible long term cost,” says Dana.

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