Second mortgages are an increasingly popular way for homeowners to raise finance by using the equity in their property.

Second mortgages are also known as “home equity loans” and “secured loans.”

Essentially, a second mortgage is loan secured against a property on which there is already a first mortgage from a different lender. As an alternative to a second mortgage, an applicant could receive a further advance on their first mortgage.

Second mortgages are used extensively throughout the UK by homeowners who wish to release equity from their homes in order to fund activities such as:

• Home improvements
• Debt consolidation
• Purchasing a new car
• Funding a holiday

Lenders are willing to approve second mortgages for almost any purpose so long as the combined Loan to Value (LTV) ratio of the first and second mortgages does not exceed their allowable upper limit.

It is important to note that second mortgages are usually secured against the borrower’s home. Defaulting on the loan could lead to repossession.

If the applicant would prefer to not put their home at risk they may wish to consider applying for an unsecured loan instead.