2nd Charge

A second charge is a secured loan that allows you to borrow money against your home while leaving your current mortgage or 'the first charge' in place. Having a second charge will enable the lender to use any equity you have in your property as collateral.

So if your home was worth £220,000 and you had £110,000 left to pay, you'd have £110,000 equity in your home. A second charge loan would use this amount to secure funding. 

The second charge holder will claim a portion of the assets once the first charge holder has been satisfied. However, if you are in negative equity, the first charge would receive any recovered costs if you had your property repossessed, and the second charge wouldn't receive anything. Second charge loans are riskier for most lenders, also making them more expensive. 

Related topics 

What is a first charge?
What is a third charge?