You might not have heard of them but second charge mortgages are becoming more and more popular with people who need to raise some money for a wide variety of different reasons.

Also known as a second mortgage, you might want one to do some home improvements, help your children get a foot on the home-owning ladder or even consolidate a number of different debts.

They are a great alternative to remortgaging, especially if you are tied in to an agreement with your mortgage provider and would pay costly redemption penalties if you changed it.

Redemption penalties can be huge and if you remortgage there’s no saying you would get a better interest rate, you might end up paying more for your original mortgage!

Other reasons for a second charge mortgage can be if you are struggling to get a personal loan or for whatever reason you have a poor credit score.

Interest rates on second charge mortgages have been coming down, which probably explains why they are becoming more popular.

You need to be a homeowner and the amount you’ll be able to borrow will depend on the equity you have in your home to offer as security on the new loan. For example, if you have a home worth £250,000 with £150,000 left to pay off with your mortgage, it is said you have £100,000 equity, so £100,000 would be the maximum you could get on a second charge loan.

Second charge loans are regulated like all other mortgages are, so when I meet clients who are looking at one we have to go through all the affordability checks to make sure they can meet the payments, just like with other loans.

One advantage that people find is that when their original mortgage deal comes to an end, they can often merge the two and get a decent rate on the single sum.

There are alternatives: you can seek a further advance from your original lender, which might come with a tie-in fee and will also be strict on what you can borrow. Or you can seek a bank loan, though here, because it is not secured against your home, rates would tend to be higher.

As with all loan products it pays to shop around to get the best deal and I am regularly looking at the best rates and able to offer you the right product, depending on what you need the money for and your circumstances. Give me a call to find out more.