Second Charge Mortgage
There are different criteria involved when applying for a second charge mortgage. Obviously, taking on another mortgage in addition to your existing one can be a financial burden so it’s important for mortgage underwriters to look at how well you have been paying your existing mortgage, your credit rating and your affordability.
Its helps to be a homeowner
Naturally, being a homeowner will make you eligible for second charge mortgage. It is common for homeowners with an existing property who need to raise money to renovate their house or pay for a large purchase to get a second mortgage to supplement their income.
Underwriters will look at how well you have kept up with your mortgage repayments on your first mortgage. In the event that a household is struggling to keep up with their current mortgage collections, taking on further debt would only make their financial worse and could lead to a spiral of debt.
Have an existing mortgage
If you have an existing mortgage on your home, the loan providers will be able to get an idea of your finances and whether you can afford a second home mortgage.
Surprisingly, having an existing mortgage is not always essential. A second mortgage is also technically a loan for a property that is different to your residential home. For instance, you may not have an active mortgage because you have paid your mortgage off or inherited your current home from family.
Your affordability is important
When applying, mortgage underwriters will consider whether you can afford a second mortgage or not. Similar to applying for your first mortgage, applicants will need to provide details of their income and their outgoings too to see if they are eligible.
In some cases, it may be more cost effective for the applicant to remortgage instead of getting a second home loan. There are various processing and handling fees involved in new mortgage deal that need to be taken into account.
Underwriters need to assess risk and be certain that you will be able to keep up with repayments otherwise it could jeopardize your house.
Can I get a second charge loan if I have bad credit?
Yes, even if you have been in IVA or had a CCJ, you can still be eligible for a second charge loan. Mortgage providers will look at how long ago this happened and consider your current financial situation and level of income to ensure that you will be able to keep up with repayment. If successful, your monthly interest rate will likely be more than average to reflect the higher risk of default.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Some partners may charge you a fee for helping you find a Mortgage or Secured Loan or other services they provide. MAKE SURE you check with the company before agreeing to any service if they charge you a fee and what the terms are. Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk QuiddiCompare does not charge a fee and does not provide any financial advice relating to mortgages. However we may on occasion receive commissions from IFA’s and mortgage providers, brokers and intermediaries for introducing you to them. The content of this site is meant to be informational, and it should not be considered financial advice. – See more at: quiddicompare.co.uk/mortgages