TL;DR
A second charge mortgage is a secured loan against your home that sits behind your existing mortgage. It puts your home at risk if you cannot repay. Second charge mortgages are regulated by the FCA but carry higher rates than first charge mortgages and should be compared carefully against unsecured alternatives and remortgaging.
Last reviewed: June 2026 | Sources: FCA, FOS
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Mortgage Key Facts: Second Charge Mortgages Security: your homePriority: behind first mortgage on possessionRegulated by: FCA (since 2016)Typical rate: higher than first chargeAlternative: further advance or remortgage |
What a second charge mortgage is
A second charge mortgage is a loan secured against your property that ranks behind your existing (first charge) mortgage. If you fail to repay and the lender takes possession, the first mortgage lender is repaid in full before the second charge lender receives anything. This higher risk for the second charge lender is reflected in higher interest rates.
The risks most people do not check
Your home is at risk. Unlike an unsecured personal loan, a second charge mortgage gives the lender a legal charge over your property. Failure to repay can result in possession proceedings, with the same consequences as defaulting on your main mortgage.
Total debt on your property increases. Adding a second charge increases your total secured debt and reduces your equity. This affects your LTV for future remortgaging and reduces the net proceeds if you sell the property.
Remortgaging may be cheaper. If your main mortgage has little or no ERC remaining, remortgaging to a larger amount may be cheaper overall than taking a second charge at a higher rate. Compare the total cost of both options including fees.
Broker conflicts exist in this market. Second charge mortgages are sold predominantly through brokers who receive procuration fees from lenders. The market has historically been associated with high-pressure sales and unsuitable advice. Verify FCA registration and the broker's whole-of-market status before proceeding.
What to verify before proceeding
Compare the total cost of credit on the second charge against a further advance from your existing lender, a full remortgage, and unsecured personal loan alternatives. Obtain independent financial advice rather than relying solely on the introducing broker's recommendation.
Where to complain
Second charge mortgages are regulated by the FCA under MCOB rules since March 2016. Complaints about unsuitable advice or mis-selling go to the firm first, then to the Financial Ombudsman Service.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Always verify current terms with relevant providers and seek regulated advice for your specific circumstances. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Is a second charge mortgage the same as a secured loan?
Yes. Second charge mortgages and secured loans are the same product. The term second charge mortgage is used since FCA regulation aligned them with first charge mortgages under MCOB rules in 2016.
Can I get a second charge mortgage if I am in negative equity?
No. Second charge lenders require sufficient equity in the property to secure their lending. The combined LTV of both charges must typically be within the lender's criteria, usually 80 to 90 percent of property value.
Does my first mortgage lender need to consent?
Most first charge mortgages require the lender's consent before a second charge can be registered. The first charge lender may refuse or impose conditions.
What happens to the second charge if I sell my home?
Both charges are redeemed from the sale proceeds. The first charge lender is repaid first. The second charge lender receives what remains up to the outstanding balance. If the sale proceeds are insufficient to cover both, you remain liable for the shortfall.
Can I remortgage away from my first lender while keeping the second charge?
This requires the second charge lender's consent to postpone their charge behind the new first charge lender. This is called a deed of postponement and is not always granted.
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Sources FCA: Second Charge Mortgages |
