Can a Second Mortgage Be Refinanced? Complete Guide

Are you interested in a second charge mortgage? You’re in the right place to learn about it. Each month, over 6,900 people visit our website seeking advice on secured loans. 

In this guide, we’ll look at:

• How home equity works.
• The real cost of a bad second charge mortgage.
• What it means to refinance a mortgage.
• What a second charge mortgage is.
• How to get a free second charge mortgage quote.

You may be worried about the details of a second charge mortgage. That’s okay. We’re here to help you figure things out.

Let’s dive in.

What is refinancing a mortgage?

Refinancing a mortgage is when you swap your existing mortgage for a new one. The term refinancing is more common in other countries like the USA and is comparable to remortgaging in the UK. 

When you refinance your mortgage you ask the new mortgage provider to pay the outstanding balance on your first mortgage, so you still only have one mortgage to pay. It is not the same as taking out a second charge mortgage where one property has two mortgages at once (read below!)

Some people choose to refinance and borrow extra by securing the additional borrowing against any home equity available. For example, if your outstanding mortgage balance is £75,000, you might ask for a new mortgage of £90,000 so you can pay back the £70,000 first mortgage debt and have additional money to spend on other things. 

Can a second mortgage be refinanced?

Refinancing a second charge mortgage is possible. Doing so may help the homeowner to access improved repayment terms, such as a lower rate of interest. Or it could even help the homeowner to utilise even more of their home equity by refinancing and borrowing more than what is needed to pay back the second charge mortgage. 

You may be subject to fees for paying back the second charge mortgage earlier than planned. 

Can you refinance just your second mortgage?

Yes, you can refinance your second charge mortgage alone without having to include your first charge mortgage. This will mean you continue to have two monthly separate mortgage payments rather than one. 

How to refinance a second mortgage

To refinance your second charge mortgage for a better rate or increased borrowing against home equity, you will need to search mortgage providers to see what products are available. The process is the same as any other time you would want to refinance a mortgage. 

Your application will be subject to stringent checks and your credit score will be assessed. Having more home equity will not be the only factor that decides your second charge mortgage refinancing application.

Refinancing first and second mortgage together

Alternatively, you may wish to refinance and get a new mortgage that will pay off both your first charge mortgage and second charge mortgage. The benefit of this is that it streamlines your mortgage payment into a single debt with one monthly repayment. 

The disadvantage of doing so is that you could be subject to early repayment fees on both the first charge and second charge mortgages. 

Can you remortgage if you have a second mortgage?

Is it possible to remortgage your first charge mortgage if you have a second mortgage on the same property? The process is not as straightforward but it is still possible. You will be refinancing your mortgage for the amount owed on the first charge mortgage only. Or you may want to borrow more using home equity. 

However, as some of your home equity is being used to secure the second charge mortgage, the amount of home equity you have available to borrow against will be calculated by subtracting both existing mortgage balances away from the property’s current market value.