When life throws unexpected expenses your way, or you simply need extra funds for a project, borrowing against your home might seem like a good option. Two common ways to do this are through a second charge mortgage or remortgaging. But which is best for you? This article will walk you through both options, their pros and cons, and help you decide which one could suit your needs. 

What is remortgaging? 

Remortgaging means swapping your current mortgage for a new one. You’ll still owe the same amount, but if you need extra money—perhaps for home improvements or to pay off debts—the new mortgage will cover both the old amount and the extra funds you need. 

So, when you remortgage, you’re essentially paying off your old mortgage with a new one. You can stay with the same lender or switch to another. 

Why would someone remortgage? 

There are several reasons why remortgaging might make sense: 

  1. To get a better deal: If your fixed term mortgage deal is ending, remortgaging can help you get a lower interest rate or better terms. 
  2. To borrow more money: If you need extra funds for things like home improvements or debt consolidation, remortgaging can help. 
  3. To simplify payments: Combining your current mortgage with extra borrowing into one payment could make things easier. 

However, before you remortgage, check if you’ll face any early repayment charges (ERCs) for paying off your current mortgage early. 

When is remortgaging a good idea? 

Remortgaging might be the right choice for you if: 

  • You want a better deal: If your current mortgage rate is too high, remortgaging can help you find a better deal. 
  • You need extra money: If you need to borrow more for a home renovation or to pay off debt, remortgaging could be the way to go. 
  • You want simpler payments: Combining everything into one mortgage could make it easier to manage your payments. 

Before deciding, make sure you check for early repayment charges (ERCs) that might apply. 

Second charge mortgage or remortgage? 

Now that we’ve covered remortgaging, let’s talk about second charge mortgages. A second charge mortgage lets you borrow extra money on top of your current mortgage without changing your original loan. Your first mortgage stays the same, and the second charge mortgage is added on top. 

When is a second charge mortgage a good idea? 

A second charge mortgage could be the better option if: 

  • You’re happy with your current mortgage: If your current mortgage deal is good and you don’t want to change it, a second charge mortgage lets you borrow extra money without altering your  mortgage. 
  • You need money quickly: Second charge mortgages are often quicker to arrange than remortgaging. 
  • Your credit score has dropped: If your credit score isn’t as good as it was when you first got your mortgage, you may still be able to get a second charge mortgage, while remortgaging might be harder. 

Why would someone take out a second charge mortgage? 

There are many reasons why people choose a second charge mortgage, including: 

  • Home improvements: If you want to make changes to your home, a second charge mortgage could provide the funding you need. 
  • Debt consolidation: A second charge mortgage can help you pay off several unsecured debts by combining them into one, often with a lower interest rate. 
  • Emergency expenses: If you face unexpected costs, like medical bills or car repairs, a second charge mortgage could help. 

Do you pay early repayment charges with a second charge mortgage? 

Yes, just like with remortgaging, there may be early repayment charges (ERCs) if you pay off the second charge mortgage early. Always read the terms carefully before agreeing. 

Are second charge mortgages more affordable? 

While second charge mortgages are often quicker to arrange, they can sometimes have higher interest rates than remortgaging. However, they may still be cheaper than other loan types, like personal loans or credit cards. Be sure to compare rates and terms to find the best option for you. 

Key considerations before taking out a second charge mortgage 

Before going ahead with a second charge mortgage, think about these important factors: 

  1. Interest rates: Second charge mortgages typically have higher interest rates than remortgaging. Be sure to shop around and compare offers. 
  2. Two payments: With a second charge mortgage, you’ll need to make two payments each month—one for your original mortgage and another for the second charge mortgage.