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.

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!)

For illustration, a new £90,000 mortgage used to repay a £75,000 settlement balance leaves £15,000 before fees. Include any early-repayment charge and confirm the actual settlement figure.

Can a second mortgage be refinanced?

A second charge may be refinanced if the new lender accepts the security, purpose and affordability. A lower rate or monthly payment does not guarantee lower overall cost.

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

Can you refinance just your second mortgage?

It may be possible to refinance only the second charge, leaving the first mortgage in place, subject to lender consent and the legal priority arrangements.

How to refinance a second mortgage

Compare appropriate products and obtain settlement figures and a personalised illustration. Include broker, lender and legal charges and any early-repayment charges.

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?

Remortgaging the first charge while retaining a second charge may require the second lender’s consent or a deed of postponement so the new lender has the required priority. Alternatively, the second charge may need to be repaid.

Calculate equity using all secured balances and assess the resulting borrowing after completion. Compare total costs and affordability; both mortgages put the home at risk if repayments are missed.