Stick or Twist – Do You Really Need To Remortgage To Raise Funds?

There are lots of reasons why you may be looking to borrow money and improving a property still tops the charts. Consolidating debts, vehicle purchases and supporting children are next on the list and typically the first thought is to remortgage. However, this isn’t always the smartest choice, and a second charge mortgage can often provide a more suitable and cost-effective solution.

A second charge mortgage is simply another loan secured against your property, while your existing mortgage stays exactly as is. This is particularly useful if you’re currently on a low-rate mortgage, tied into a fixed deal where early repayment charges would apply or enjoying interest only payments. By taking out a second charge, you can access the funds you need without losing the benefit of your current arrangement.

Many homeowners use second charge mortgages for big projects that add value to their home and improve their lifestyle. A second charge lets you unlock equity specifically for the project and because the loan is secured, it often allows for larger sums than a personal loan could cover and lower rates.

Debt consolidation is another common reason as credit cards and personal loans can carry high interest rates. Juggling multiple payment scan quickly become problematic and effecting a second charge mortgage can bring everything into one manageable monthly payment (often at a lower rate than unsecured borrowing). It’s not right for everyone though and you should carefully weigh up the long-term impact as opposed to the short-term reduction in monthly outgoings and simplifying your finances - This is why we have invested in a fabulous calculator that can assess whether this option is right for you!

Second charge mortgages can also help when circumstances have changed since you first arranged your mortgage. Changes to income structures, starting self-employment, reduced hours and bonuses can make a remortgage harder to secure. Lenders offering second charges are typically more flexible and make them useful in situations where traditional mortgage lending options are out of reach.

Some clients also choose this route for unexpected reasons, such as supporting a business venture or helping children onto the property ladder. The flexibility of second charge lending means the funds can often be used for a wide range of purposes, provided it’s affordable.

As mentioned earlier, this kind of borrowing is not right for everyone. It’s still secured against your home and so affordability and long-term planning are key considerations. Specialist advice is essential to look at all the options available (remortgage, further advance, or a second charge) and ensure that your decision genuinely suits your circumstances.