What are Second Charge Loans?

A Second Charge or Homeowner Loan is a loan that is secured against a customer’s home. Loans can range from £3,000 to £2,500,000.

The maximum loan amount available is based on value, that is the remaining equity, within the customer’s home and the customer’s ability to afford the monthly repayments.

The remaining equity means the difference between the property’s value less the amount of debt already secured against the property.

Each lender will assess the application on its individual circumstances by credit searching the customer and possibly performing a valuation on the property, although this is often an automated process.

There is no deposit required when taking out a secured loan; however a lender may charge fees. The fees must be disclosed to a customer prior to signing their agreement and are charged to cover additional costs incurred by a lender when processing a secured loan application. FairMoney™ results tables always already include all fees charged within the price quoted. The interest rate charged and thus the cost of repayments are dependent on a customer’s credit history and the remaining equity in their home. Secured lenders will charge a higher rate to customers with a poor credit history. Because the loan is secured against a customer’s home, the lenders have reasonable security and because of this can offer better rates and are more willing to consider customers with worse credit history.

Rates can be applied on both a variable rate or fixed rate basis. If the interest rate is variable this means that the interest rate charged on the outstanding balance varies as market interest rates change. As a result your payments may increase or decrease throughout the life of the loan. If however the interest rate is fixed, this means the interest rate you pay on this loan will remain the same for the entire life of the loan. Therefore you will know exactly what your repayments will be for the term of your loan.

As all loans are secured against a customer’s property, all customers must be aware that the property will be at risk if the customer does not make their contractual monthly repayments on time.

It is also important that a customer compares the best loan rates available based on their own credit profile, making sure that they only apply for loans that match their credit history so as to increase their chances of being approved. So why not try our Smart Search Technology which will do this for you today?

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

MISSING PAYMENTS WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE.