Second charge mortgages for home improvements

Are you thinking about a second mortgage for home improvements? You've landed in the right spot!

In this simple guide, we’ll cover:

• What a second charge mortgage is.
• How a second charge mortgage works.
• If a second charge mortgage is the same as a home equity loan.
• If you can use a second mortgage for home improvements or renovations.
• Other ways to fund home improvements.

We know that the idea of a second mortgage might sound scary. But remember, you’re not alone. We’re here to help you understand it all in a way that’s easy to follow. 

So, let’s get started and learn more about second mortgages for home improvements together.

Can you get an extra mortgage for home improvements?

There are different methods of borrowing that can help fund home improvements. One option is to take out another mortgage on your home. This is known as a second charge mortgage. 

We discuss this option in detail and explain some of the alternative methods of financing home improvements towards the end of this guide. 

Can I use a second mortgage for home improvements?

A second-charge loan may fund home improvements if the lender permits the purpose and the amount is affordable. Check minimum amounts and whether this is appropriate for the scale of the work.

Can I use a second mortgage for renovations?

Larger renovations can need lender consent and specialist funding. Check planning, building regulations, insurance and any lease terms before starting structural alterations.

Can I only use second mortgages for home improvements?

The agreement can restrict use of the funds. Tell the lender all intended purposes and obtain approval rather than assuming the money can be spent however you wish.

Another common reason someone may choose a second charge mortgage is to consolidate debts. Some even use the money as a deposit on another property, such as a holiday home.

Why use a second mortgage for home improvements

A second charge may offer an amount or rate that suits some projects, but neither a larger loan nor a lower total cost is guaranteed. Compare suitable alternatives, term, fees and repayments.

Improvements can add value, but the increase may be less than the project and borrowing cost. Do not rely on appreciation to make repayments affordable.

If you do decide to use a second mortgage, only consider borrowing from a lender that is authorised and regulated by the Financial Conduct Authority (FCA). 

The downside of a second mortgage for home improvements

There is another downside of a second mortgage, other than the potential risk of losing your home if you cannot keep up with long-term payments.

Check arrangement, broker, valuation, legal and early-repayment charges, including when payable. There is no universal UK “closing fee” due at the end; compare the total amount repayable.

Can you add remodel costs to a mortgage?

Funding both a purchase and major works depends on the lender’s valuation, property condition and criteria. An ordinary purchase mortgage may not cover the proposed works.

A renovation or self-build product may be appropriate for some projects. Check staged funding, cash-flow requirements and contingency costs with an experienced adviser.