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The Second Charge Mortgage Process for New Applicants

Walk through the second charge mortgage process step-by-step with a comprehensive guide to first-time second charge mortgage applications.

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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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The Second Charge Mortgage Process for New Applicants

The second charge mortgage process is fairly similar to that of applying for a first charge mortgage, although it can be highly beneficial to work with a broker experienced in how to apply for second charge mortgage borrowing and with advance knowledge of the questions a lender is likely to ask.

When you apply for second charge mortgage borrowing, you are effectively taking out a second, separate mortgage, either with the same lender or a different mortgage provider. The property used in the second charge mortgage process acts as security, which means your home could be repossessed if you do not keep up with the repayments.

However, the benefit of using a second charge mortgage for home improvement, or to cover other costs, is that you can use the funds for almost any purpose and do not need to remortgage if you would incur heavy early exit fees or lose an excellent interest rate.

Applying for a Second Charge Mortgage Explained

When you apply for second charge mortgage lending, your broker will recommend the right lenders based on the amount you wish to borrow, your property and equity ownership, and other factors such as your age, financial status and employment.

While the second charge mortgage process is straightforward, the selection of a suitable lender is perhaps the most important aspect since an applicant that passes all of the lender's eligibility criteria is more likely to be offered a competitive rate.

Regardless of whether you are applying for a second charge mortgage debt consolidation product, the lenders that tend to specialise in second charge mortgages only accept applications through their networks of approved brokers.

The nature of the second charge mortgage process also means you will not normally need to appoint a solicitor, so provided you have selected a great broker and have the process of securing a second charge mortgage explained, you are ready to move forward.

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Documents Required to Apply for Second Charge Mortgage Borrowing

Lenders adopt different policies, and the second charge mortgage process is no different – the documents you need may depend on which lender you apply for second charge mortgage borrowing from. However, there are a few pieces of information that all lenders will need to see:

  • Copies of payslips and bank statements or accounts and tax returns if you are self-employed.
  • Copy of your credit report (although the lender will normally access this directly).
  • A valuation of the property and mortgage statement from the first lender.
  • Proof of ID and evidence that you live at the property.
  • Details of other debts and obligations that may affect your affordability.

If you intend to use a second charge mortgage for debt consolidation purposes, the lender will ask for details of all the debts you intend to repay through the second charge mortgage process and will account for the differences in outgoings when assessing affordability.

Average Duration of the Second Charge Mortgage Process

As second charge mortgage reviews will indicate, these products have fallen under the remit of the Financial Conduct Authority (FCA) since 2016, which means the second charge mortgage process includes several assessments to ensure a lender is offering secured financing responsibly.

Therefore, as an independent broker, the second charge mortgage we work through with you will be similar to that of a standard product, beginning with consulting your broker to discuss what outcomes you are expecting when you apply for second charge mortgage borrowing.

Once we have established the purpose of the loan, your equity ownership, finances and property valuation, we begin the second charge mortgage process by matching your requirements and circumstances with appropriate lenders.

When you are ready to proceed and apply for a second charge mortgage with your preferred lender, we help with the paperwork, application forms and supporting documentation, liaising with the lender throughout the second charge mortgage process.

Many lenders offer pre-approval, so you can fill in some basic information explaining what the borrowing is for, such as using a second charge mortgage for home improvement. If you have initial approval, we can move on to the next phase by submitting a full and formal credit application.

Fact Finding as Part of the Second Charge Mortgage Process

Our initial consultation includes completing an evaluation called fact-finding – this is a basic overview which helps us make tailored recommendations before we get further along in the second charge mortgage process.

Fact funding consultations help a broker create a key facts summary, which shows all of the details of the funding you wish to find, their suggestions and other relevant details necessary to run a first credit search as part of the pre-approval application.

This first part of the second charge mortgage process is not stored on your credit file but allows the lender to run through a quick analysis to see whether they are likely to be able to approve your loan. If they are satisfied, they will issue an agreement in principle, which you follow up with your formal application.

Application Processing During the Second Charge Mortgage Process

Underwriting is an important aspect of the second charge mortgage process, where the underwriter completes a more in-depth assessment of your income and outgoings, credit record and other information. This stage is where your bank statements, payslips, proof of ID and other information are needed to allow you to go ahead and apply for second charge mortgage lending.

From there, we liaise with the second charge lender to answer questions, clear up any queries or request further information where necessary.

Property Valuations When You Apply for Second Charge Mortgage Borrowing

Finally, the lender will ask for the property to be valued as part of the second charge mortgage process. This is normally mandatory because the lender must have an accurate and up-to-date valuation to verify your equity ownership, which acts as security.

Some lenders will request a valuation once they have provisionally approved your full application, and others will expect an independent valuation from the outset – we can provide more information about this part of the second charge mortgage process depending on the lender you select.

Once all of these steps are complete, the lender will produce a formal offer to lend, stating any fees and charges, along with the interest rate. Revolution Finance Brokers can negotiate where there is scope to reduce those costs before finalising the deal.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked

The second charge mortgage process varies depending on the complexity of the application, any questions the lender needs to ask, and the speed at which a valuation on the property can be completed. The average time required is roughly one month, although some second charge mortgages for home improvement loans complete much faster, and others can take a little longer.

Second charge mortgage reviews can be a good source of information if you'd like to hear other clients' experiences applying with or borrowing from a specific lender or bank. However, we would advise you to limit the amount of decision-making you make based on second charge mortgage reviews since borrowers are more likely to leave reviews if they have had a bad experience, and it may be very difficult to verify the accuracy of online testimonials.

If you are unsure whether a second charge mortgage is the right option for you or would like independent guidance comparing different potential borrowing solutions, the Revolution Finance Brokers team can happily advise.

Provided you own a property with a good level of equity and do not want to borrow more than approximately 80% to 85% of your equity value, you should be able to apply for second charge mortgage lending. The right lender will depend on multiple factors, though, and applying at random to the first lender you find may potentially mean being turned down if you do not fit into their lending policies or eligibility criteria.

Yes, second charge mortgage products are commonly used for home improvement projects such as financing an extension, loft conversion, renovations or other works like installing a new kitchen or bathroom.

Most lenders will be able to consider applicants who apply for a second charge mortgage for debt consolidation purposes – they may ask for details of the debts you will clear with the lending and take this into account when reviewing your credit history.

A second charge mortgage loan is the same product as a second charge mortgage, only with slightly different terminology.

Credit scores are a factor, and if you have adverse credit, you may need to apply to specialist providers who are less concerned with credit scoring and more focused on affordability assessments and property valuations. Bad credit applicants typically pay higher interest rates and have a smaller pool of lenders to choose from, but most can apply for second charge mortgage borrowing with assistance from a whole-of-market broker.

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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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