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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
A remortgage can raise extra money by replacing your whole mortgage with a larger one, usually with a new overall rate. A second charge mortgage raises money through a separate loan that sits behind your main mortgage, which continues unchanged. Both put more borrowing against your home, but the mechanics, and the effect on your existing deal, are quite different.
How do the two actually compare?
| Remortgage (borrowing more) | Second charge mortgage | |
|---|---|---|
| What happens to your main mortgage | Replaced with a new, larger mortgage | Continues unchanged |
| Early repayment charge on your current deal | May apply if you leave it before it ends | Usually avoided, since the main mortgage isn’t disturbed |
| Rate | One rate applies to the whole new loan | Your main mortgage rate and the second charge rate can differ |
| Affordability assessment | Full assessment on the whole amount | Full assessment on the second charge amount by that lender |
| Who assesses you | One lender, for the combined amount | Two lenders, assessing separately |
| Legal work | Usually yes | Sometimes more limited, since the main mortgage is untouched |
When does avoiding your main deal matter most?
The biggest reason to consider a second charge mortgage instead of remortgaging is an early repayment charge (ERC) on your current deal. If you’re partway through a fixed or tracker deal with a sizeable ERC, replacing that mortgage early to raise money could mean paying the charge on top of the new borrowing costs. A second charge mortgage avoids this, because your main mortgage stays in place until its own deal naturally ends. Our guide on early repayment charges explained covers how these charges typically work and when they taper off.
If you’re near the end of your current deal anyway, an ERC may not apply regardless of which route you choose, which often tips the comparison back towards a straightforward remortgage.
When does remortgaging tend to make more sense?
- Your current deal has ended, or is ending soon, so there’s no ERC to weigh against the extra borrowing.
- You’d prefer one loan and one rate rather than managing two separate mortgages with two lenders.
- The combined amount, on one rate, works out more sensibly than keeping two loans running side by side. Only a full comparison of the deals on offer can show this, since we cannot quote rates here.
- Your LTV and credit history support a competitive remortgage, as explained in our guide on how LTV affects a bad credit remortgage.
When does a second charge mortgage tend to make more sense?
- You’re well into a fixed deal with a significant ERC, and remortgaging now would mean paying it.
- You want to keep a good existing rate on the bulk of your mortgage and only borrow the extra amount at a separate rate.
- Your main mortgage lender won’t offer a further advance for the amount or purpose you need, but a second charge lender will. Our guide on what a further advance is explains that route, which is usually tried first since it avoids a second lender altogether.
Do you need your main lender’s agreement for a second charge?
Yes, usually. Most mortgage terms and conditions require you to get your main lender’s consent before securing another loan against the same property. This is a formality in many cases, but it means a second charge mortgage isn’t something you can arrange entirely independently of your existing lender, even though the loan itself comes from elsewhere.
What’s assessed for each?
Both routes involve a fuller assessment than a simple product transfer, since both involve new borrowing. A remortgage lender assesses your income, outgoings and credit history against the whole new loan amount. A second charge lender does the same, but only against the additional amount, while also considering the existing mortgage and total secured debt on the property. Either way, expect a credit search, an affordability assessment and, usually, a valuation.
Can you change your mind later?
Yes, in the sense that neither choice is permanent. Someone who takes a second charge mortgage to avoid an ERC can often look at combining it with their main mortgage once that deal ends, subject to a fresh assessment. Someone who remortgages to borrow more is simply on a new mortgage like any other, and can compare deals again when that one ends too. Reviewing your situation each time a deal is coming to an end, rather than assuming today’s choice is fixed forever, keeps your options open.
What changes if you have adverse credit?
Adverse credit is assessed separately by each type of lender, and the effect can differ. A remortgage to a new lender for a larger amount means the whole loan is assessed against your credit file, so a CCJ, default or low credit score affects the full application. A second charge lender assesses only the new borrowing, and some specialise in adverse credit, though this varies by lender and how much you want to borrow.
Whichever route looks more suitable, remember that either one secures more debt against your home. If the purpose is to consolidate other debts, read our guide on remortgaging to consolidate debt first, and get free, impartial advice from MoneyHelper, StepChange or National Debtline before taking on more secured borrowing.
Frequently asked questions
Which is quicker to arrange, a remortgage or a second charge mortgage?
It varies by lender and complexity, but a second charge mortgage can sometimes be arranged more quickly, since it doesn't disturb your main mortgage. A remortgage that also involves moving lender usually takes longer, because the whole loan is being reassessed and replaced.
Can I get a second charge mortgage if I'm mid-way through a fixed deal?
Often, yes, since a second charge sits behind your main mortgage rather than replacing it, so it doesn't usually trigger the early repayment charge on your existing deal. This is one of the main reasons people consider a second charge instead of remortgaging early. Confirm the position with both lenders, as terms vary.
Does a second charge mortgage affect my credit file separately from my main mortgage?
Yes. It's a separate credit agreement, assessed and recorded on its own, so payments, and any missed payments, on the second charge show separately from your main mortgage on your credit file. A future lender is still likely to look at both when assessing an application, even though they're recorded apart.
Is it ever better to combine both loans into one remortgage later?
Sometimes. Once your main deal ends, or if a lender will consider it, combining a second charge into a single remortgage can simplify things, though it depends on the total amount, your equity and both lenders' terms. An adviser can compare the cost of combining against keeping them separate.