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How to Secure the Best Second Charge Mortgage Rates

Understand the average UK second charge mortgage rates and how to strengthen your application to secure a favourable lending offer.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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How to Secure the Best Second Charge Mortgage Rates

Second charge mortgage rates vary considerably, with lenders offering anything from a minimal 2% to upward of 20% depending on several second charge mortgage criteria, your affordability assessment, credit rating, property value, and the equity you own in your home.

Learning how to get the best second charge mortgage interest rates means understanding the qualification policies lenders apply and also evaluating your circumstances and how to improve your application or reduce the perceived risk.

The primary way to pass second charge mortgage criteria assessments is to demonstrate you have the income and property value to comfortably keep up the repayments, although Revolution Finance Brokers explains a little more about the essential information you should know before you apply.

Why Do Second Charge Mortgage Interest Rates Differ?

Like any mortgage product, a lender may publish standard rates but has discretion about the second charge mortgage rates they wish to offer to any applicant. In most cases, second charge mortgage rates of 7% or below are perceived as competitive because the interest charges are usually higher than on a first charge mortgage.

There are lots of ways to ensure you don’t pay more than necessary for a second charge family loan, such as:

  • Working with an experienced, independent mortgage broker with knowledge of the current second charge mortgage rates and deals available on the market.
  • Only applying to legitimate, regulated lenders and conducting a second charge mortgage comparison to evaluate all of the product rates and fees.
  • Assessing additional costs such as property valuation expenses and product charges, rather than focusing solely on second charge mortgage interest rates.

Second charge mortgage rates are typically higher than for a first charge mortgage because the second charge lender is second in priority to receive repayment if the property were to be repossessed due to non-payment.

However, the second charge mortgage criteria, such as credit scoring, income and equity value, will influence the rates you are offered.

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Finding the Most Competitive Second Charge Mortgage Rates

The primary way to find the best second charge mortgage interest rates is to consult a whole-of-market broker with access to the breadth of the second charge lending market rather than choosing between one or two products with one bank or lender.

Every lender will have slightly different second charge mortgage criteria, so finding the lender with the policies and terms that best align with your requirements and circumstances can significantly improve your chances of approval and being offered a good rate.

A second charge mortgage comparison is also highly advisable, where other fees and costs may mean one product that appears to be more competitive is actually more expensive when all the charges are factored in.

Are Fixed or Variable Second Charge Mortgage Rates Lower?

As we’ve mentioned, a rate of 7% or below is usually considered good for second charge mortgage rates, but you will stand a better chance of getting a lower offer if you meet the lender’s affordability criteria and have a solid credit rating.

Like other lending products, second charge mortgage rates also depend on the product repayment structure, where you might opt for a fixed-interest deal or a variable-interest loan.

Fixed interest second charge mortgage interest rates are static for a pre-agreed period and will not increase or decrease until you reach the end of the agreement. Variable second charge mortgage rates are linked to the base rate or another metric so that they can adjust from month to month.

The best option will depend a little on the amount you wish to borrow, how well you comply with the lender's second charge mortgage lending criteria and the types of second charge mortgage rates available to new applicants at the time you apply.

Who Offers Second Charge Mortgages in the UK?

The second charge mortgage rates you end up paying will depend on the product and lender you choose, and every lender is different in terms of the LTV they will offer, the affordability assessments they conduct, and the level of 2nd charge mortgage bad credit they deem acceptable.

While some lenders tend to offer lower second charge mortgage interest rates than others, the decision will also depend on the amount you wish to borrow, what your property is worth, and the equity you own – the cheapest second charge mortgage rates are likely to be available to applicants who meet all the other second charge mortgage criteria.

It is also important to clarify that representative rates used on product marketing, advertising and price comparison sites for the limited number of lenders who choose to advertise in this way may not reflect the actual second charge mortgage interest rates you are offered.

Some of the most competitive lenders are niche or specialist providers who operate outside of the mainstream banking sector. It is almost always possible to secure favourable second charge mortgage interest rates by working with an independent broker rather than relying on comparison sites to offer a reliable second charge mortgage comparison.

Second Charge Mortgage Interest Rates vs Second Mortgage Costs

Many applicants take out a second charge family loan to finance another property purchase – perhaps a holiday property, a buy-to-let, or a residence for a relative to live in. This scenario has two options – a second charge mortgage or a second mortgage as a separate product secured against the new property.

Because the terms are so similar, they are easy to confuse. Still, you could conduct a second charge mortgage comparison to see which option is the most viable financially and how you can use your equity to reduce the cost of borrowing.

As in many situations, there is no one universal answer. While second charge mortgage interest rates UK tend to be higher than any first charge mortgage, it may be that you have a better prospect of securing the lending you need if the property or owner is unable to qualify for other mortgage borrowings.

If you would like to discuss the details of varied second charge mortgage comparison options, the typical second charge mortgage rates currently available, or any other aspect of your financing requirements, please get in touch with the friendly team at Revolution Finance Brokers at any time.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

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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