Second Charge Mortgage Calculator UK

Are you thinking of getting a second charge mortgage for your home but aren’t sure about the cost or the process to get one? Every month, over 6,900 people visit our website looking for answers regarding this situation.

In this friendly guide, we’ll explain:

• How much you can expect to pay for a second charge mortgage.
• How long it takes to get a second charge mortgage.
• Whether a lender can refuse the second charge mortgage.
• Whether your credit score can prevent you from getting a second charge mortgage.
• What the rates are for a second charge mortgage.

Many of our team members have been in your position, so we understand exactly how you feel and know how to make things clearer and simpler. Let’s dive in and learn more about what you need to get a second charge mortgage and how much you can expect to pay for it if approved.

How does a second charge mortgage calculator work?

A second mortgage calculator works by asking the user to enter how much they want to borrow. Some second mortgage calculators will ask about your home equity to verify that the loan amount you need is possible, based on its loan-to-value ratio. You’ll also need to enter how long you want to repay the secured loan, ranging from a few years to decades.

Once this information has been entered, the calculator will work out how much your monthly repayments would be using a representative interest rate for the amount needed and the loan term. You’ll be able to see a full breakdown of the loan costs. 

How to compare second charge mortgages

Modern second charge calculators use a slider scale to change how much you wish to borrow and how long you want to repay. This makes it quick and easy to see how repayments are predicted to change based on different amounts and loan terms. They are a good way to research the market and compare second charge mortgages. 

Where can I use a second mortgage calculator?

Second mortgage calculators are found on the websites of lenders offering these products, such as banks. They are typically found on the same page advertising the secured loan to make them easily accessible. 

It should be said that second charge mortgage calculators are less commonly found compared to generic unsecured loan and secured loan calculators. This may be due to banks wanting to discuss these loans in person rather than letting you apply easily online. 

Is a second charge mortgage calculator accurate?

Second charge mortgage calculators offer little personalisation. They are programmed to work out monthly repayments using the lender’s representative example rates only. The representative example is considered the fairest way to advertise loans to a mass market. It is based on 51% of successful second mortgage applications. 

For example, if the lender’s representative example is 7.9% then at least 51% of applicants received this or a lower rate. But that also means that 49% of people were offered a higher rate than 7.9%, usually due to their personal finances or a lower credit score than average. 

Therefore, a second charge mortgage calculator is not always accurate. If you have a bad credit history with a low credit rating, there is a higher chance that these calculators will not be as accurate for you. When comparing options in these situations, it’s also worth noting the lender’s maximum representative rate, which is the highest rate you can be offered. 

Do I have to use a second charge mortgage calculator?

If you would prefer not to use a loan calculator as part of your search, you don’t have to. As they are not accurate for almost half of users, you may not feel the benefit of using them, especially if your personal circumstances and credit score are different to most applicants. 

Using a mortgage or financial advisor to search for a deal will mean not having to do any research yourself. Just make sure the professional service provider that you opt for is authorised and regulated by the Financial Conduct Authority. 

How long does a second charge mortgage take?

A second charge mortgage could take anywhere from three weeks to two months to get approved. Securing debts against your home is known to take longer than other loans because the lender may need to complete more checks and might need to revalue your home to accurately assess the equity in your property. 

Sometimes, an appraisal of your home is not needed, and the second charge loan is approved quicker. 

Make sure you have all of the necessary documents together, such as proof of your income and recent bank statements, before applying so that the process goes as smoothly as possible.

Can a lender refuse a second charge?

As part of responsible lending, and as stated by the Financial Conduct Authority, lenders must robustly assess your suitability for any loan and ensure the loan amount is affordable to you. Lenders can refuse your application if they believe the second charge would put pressure on your personal finances and possibly even cause you to struggle. 

When a lender considers your second charge loan application, they will assess your regular income against ongoing debts and the projected second charge mortgage. If taking out a second charge would push your debt repayments over a certain percentage of your income, the repayments on your second charge loan will be deemed unaffordable. 

Can I get a second charge with a poor credit score?

But just because a low credit score can hold you back, it doesn’t mean it always will. There are many lenders that still provide home equity loans and HELOCs to people with unsatisfactory or bad credit. If you are approved for a second charge with a lower credit score, you’ll likely be offered a higher interest rate. 

You can even find some lenders targeting their ads to people with poor credit. They advertise a product known as a bad credit loan.

Because it is a secured charge loan using the equity in your property – and therefore your property – as collateral, you might have more joy trying to get these loans with bad credit compared to unsecured loans. 

Second charge mortgage rates

This forum user on MoneySavingExpert is thinking about taking out a second charge mortgage and is looking for advice on what the interest rates would be on this.

Second charge mortgage rates can differ widely on the UK market. You will find some low single-digit interest rates and others well above 20%. To secure the lowest interest rates, you’ll need to search for the best lenders at the time you’re ready to apply and also ensure you have a decent credit rating.