Generally, it needs to be at least 6 months before taking out a second charge mortgage after getting and securing your first mortgage.
Second mortgages are common for people to access cash, usually for debt consolidation or home improvements, but there is a 6 month wait before you can apply and access one from either the same lender or a different lender.
Scenario Example
You have bought a new property with a mortgage. The property is worth £1 million, you paid a 25% deposit at £250,000 and the rest is from the bank, hence it is a 75% LTV mortgage at £750,000.
You would like to free up some cash because you spent it all on your deposit. So you would like to borrow some extra money via a second charge mortgage or secured loan in order to do a bunch of home renovations and also pay off some other debts. This second charge loan will be a smaller amount, but still significant as you could be able to access something like £50,000, £100,000 or £200,000 repaid over 1 to 25 years.
Why Do You Have To Wait 6 Months Before Getting a Second Mortgage?
Typically it is because there is a clause in first mortgage agreement and they want to avoid borrowers taking on too much debt that they cannot afford to repay. The first mortgage is the one usually taken out to purchase the home and the second mortgage becomes a way to top up your income and it is the second in line to being paid each month – which is why it is also known as a ‘second charge mortgage.’
Are There Ways To Get a Second Charge Mortgage Quicker?
Yes, during the application of the first mortgage, you can request the possibility of being able to get a second charge mortgage immediately and some lenders are more flexible and do not have a 6 month stipulation in place.
Do I Have To Apply For a Second Charge Mortgage With The Same Lender That Gave Me My Mortgage?
Absolutely not. It is common to use big time banks as your original mortgage lender such as Halifax, Nationwide, Barclays etc and then use a specialist second charge mortgage company to do your second mortgage such as UTB Bank, Shawbrook Bank, Norton Finance etc.
What Happens if I Cannot Pay Back My First and Second Charge Mortgage?
The first mortgage is the priority for the banks, so any repayments at the end of the month will go straight there and the second lender will be second fiddle. If you are struggling to make any repayments, this may result in:
- Late fees and penalties
- You can request a mortgage holiday to avoid payment for a few months
- Negative impact to your credit score
- Repossession of the property
- Require to sell the property
- You may remortgage under more favourable terms
