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Second Charge Mortgage Calculator: Costs and Fees to Be Aware Of

Understand all the product costs, application fees and interest charges commonly levied by second charge mortgage providers.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Using a second charge mortgage calculator

A second charge mortgage calculator can be a useful way to assess all of the costs associated with applying for second charge mortgage deals – but it is essential you compare potential products like for like, to ensure you aren’t paying more than necessary.

Can a second charge mortgage calculator UK give a fair overview of all the costs and fees levied by most second charge mortgage providers? A calculator is helpful but has limitations, so we always recommend working with an experienced broker to verify that your second charge mortgage deals offer competitive value for money.

Let’s look at average interest rates, product costs, property valuation expenses and other fees linked with a second charge mortgage.

Fees and Costs Charged By Second Charge Mortgage Providers

While a second charge mortgage calculator will primarily review the interest added to your second charge mortgage repayments, you should also be conscious of other fees, since these may considerably impact the overall cost of borrowing.

These fees can vary between second charge mortgage providers but often include the following:

  • Administration fees charged by second charge mortgage providers to set up the borrowing agreement and release the funds.
  • Valuation costs, if the lender needs an appraisal of the property market value to decide how much they are willing to lend.
  • Second charge mortgage early repayment fees apply if you choose to exit the product before the end of the term - this can be a fixed value or a proportion of the outstanding mortgage.

It is also important to factor in broker fees; although professional assistance negotiating second charge mortgage deals means that the interest and other fees are likely to be reduced by a greater value, you will have a greater choice of products and lenders to choose between and will be better placed to have your chosen second charge mortgage deals approved.

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Average Interest Rates on Second Charge Mortgage Deals

Rates offered on second charge mortgage deals vary since lenders will have contrasting policies and lending criteria that affect the amount they are willing to lend, and the interest offered depends on the assessed level of risk.

Factors that will impact the interest charged on second charge mortgage deals you qualify for include:

  • The amount you'd like to borrow and the Loan to Value. For example, if you apply to second charge mortgage providers for up to 40% of the property equity, you will usually be offered a lower interest rate than if you apply for a 70% LTV.
  • Repayment terms, with a longer-term resulting in lower monthly repayments but usually a higher total debt overall.
  • Credit rating and income – professionals in stable employment with a good credit score will be offered a more competitive interest rate.

Second charge mortgage providers will also consider your first mortgage, the repayments you are making, how that compares to your income, and whether they believe you can afford to keep up with the repayments on an additional mortgage.

Second Charge Mortgage Calculator Comparisons

Second charge mortgage deals are inevitably more expensive than first charge mortgages because, to the lender, this is a riskier product. The second charge means that if a property were repossessed due to non-payment, the first lender would recoup their debt first, with any residual proceeds from the property sale going to the second lender.

Therefore, second charge mortgage providers may make a loss if a borrower does not keep up with the payments because the security isn't as great an assurance, and less so if the LTV is high.

Repossessed properties normally sell at below market value via an auction, so the second charge mortgage deals available will account for these risks in the interest rates and other product fees attached.

Although a second charge mortgage calculator UK will provide a general indication of the costs of a second charge mortgage, we always recommend working with a skilled broker to ensure any less obvious costs have been accounted for.

Second charge mortgage deals that look attractive may be less so once all the associated fees and charges have been factored in, and a second charge mortgage calculator usually bases calculations on advertised rates rather than the actual rates offered.

Common Reasons to Consider Second Charge Mortgage Deals

There are many reasons you might decide that second charge mortgage deals are the best option for you, often where you cannot remortgage or do not wish to – perhaps because you are locked into a fixed term or because your first mortgage lender cannot match the interest rates currently available.

Some of the typical purposes of a second charge mortgage include:

  • An alternative to unsecured borrowing, like a personal loan, due to issues with eligibility or because a secured second charge mortgage calculator shows this may be a lower-cost option.
  • Reductions in your credit score since your initial mortgage, meaning a remortgage would result in a higher interest rate on all of the borrowings rather than solely on the second charge element.
  • Avoiding early exit charges, where a second charge mortgage early repayment clause will also often apply; waiting until the term ends to refinance is normally advisable.

This list is not exhaustive, and there are many other scenarios where second charge mortgage deals provide a viable way to secure the borrowing you require.

Please contact Revolution Finance Brokers at your convenience if you’d like to discuss whether this type of mortgage is a good fit for your personal circumstances.

Essential Considerations When Using a Second Charge Mortgage Calculator

We always reiterate that an online second charge mortgage calculator is indicative only – these tools cannot know with accuracy what sort of interest rates or terms second charge mortgage providers may offer you, nor know whether you will meet the eligibility requirements of any specific lender.

However, if you are comparing second charge mortgage deals online, we’d suggest you remain mindful of the following:

  • Any second charge mortgage providers offering residential lending should be Financial Conduct Authority (FCA) registered and authorised – note that this works differently for commercial second charge mortgage deals, which are not regulated in the same way.
  • Seeking independent advice from a whole-of-market broker will often mean you achieve a faster result and better interest rates since we negotiate directly with a large network of second charge mortgage providers, many of which do not deal directly with applicants.
  • Shopping around is vital since a second charge mortgage calculator is a rough guide, and you should compare the loan terms, total repayable value and APRC (annual percentage) to make informed decisions.

Please get in touch at your convenience for further guidance and advice or to request a direct comparison of any second charge mortgage deals you may be considering.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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