Second Charge vs Remortgage:What's the Difference?

If you're looking to raise money against your home—whether for home improvements, debt consolidation, or a big one-off cost—you'll often come across two options:

• Remortgage: replace your existing mortgage with a new one (often for a larger amount).
• Second charge mortgage: take an additional loan secured on your property alongside your current mortgage, so you have two secured repayments.

Both are secured against your home, which means your home may be repossessed if you don't keep up repayments.

Quick comparison

When a remortgage may suit you

A remortgage is often considered when:

• Your current deal is ending (or ERCs are low), and you want to switch to a better rate.
• You want to combine borrowing into one payment.
• You have strong affordability and credit, and the new lender offers a competitive deal.

If you're switching deals without taking additional borrowing, there are FCA rules designed to make "rate switching" and remortgaging easier for many borrowers.

When a second charge may suit you

A second charge mortgage may be worth exploring if:

• You're on a very good rate on your existing mortgage and don't want to lose it.
• Your current mortgage has high ERCs, and remortgaging now would be expensive.
• You need to borrow extra but a full remortgage isn't ideal right now (for example, timing, affordability, or credit-score changes).

Key costs and risks to consider

• Total cost over time: a lower monthly payment can still mean paying more overall if you extend the term.
• Two repayments: with a second charge, you must keep up with both secured payments.
• Affordability checks still apply: lenders will assess income, outgoings, and existing commitments.
• Your home is at risk if you fall behind: this applies to both options.

Understanding the fees

Both options can involve various fees. Here's a breakdown of what you might encounter:

Remortgage fees (typical)

• Product/arrangement fee: £0–£2,000+ (sometimes a percentage of the loan). This can often be added to the mortgage, but doing so means you pay interest on it over the term.
• Valuation fee: £0–£1,500+ depending on property value and lender. Some lenders offer free valuations as part of their product.
• Legal/conveyancing fees: £500–£1,500+. Some lenders contribute towards or cover these for straightforward remortgages.
• Early Repayment Charge (ERC) on your current mortgage: varies widely—can be 1–5% of the outstanding balance if you exit a fixed deal early. Check your existing mortgage terms.
• Broker fee (if using a mortgage adviser): varies by adviser; some work on commission only, others charge a fee. Always confirm upfront.

Second charge mortgage fees (typical)

• Product/arrangement fee: similar to remortgages, typically £0–£2,000+, and can often be added to the loan amount.
• Valuation fee: £100–£500+ depending on property value.
• Legal fees: £300–£1,000+. Because the lender needs to register a second charge, there are legal costs involved.
• Broker fee (if applicable): varies by adviser. Some second charge specialists charge a completion fee.
• First-charge lender permission fee: in some cases, your current mortgage lender may charge an admin fee (typically £50–£300) to give permission for a second charge to be registered.

How to decide (simple checklist)

Consider:

• Are there ERCs on your current mortgage? (and how much?)
• Do you want to keep your current rate/terms?
• Is a single monthly payment important to you?
• What's the total cost (not just the monthly cost)?
• How quickly do you need the funds? (timings vary by lender/case)

FAQs

Is a second charge the same as a secured loan?

Often, yes—many people use the terms interchangeably in the UK. A second charge is a form of borrowing secured against your home, behind your main mortgage.

Can I remortgage if I already have a second charge?

It may be possible, but your new mortgage lender will factor in the second repayment, and options can be more limited.

Will either option affect my credit score?

Any application can involve a credit check and new borrowing affects your credit profile. The impact depends on your overall circumstances and repayment history.

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