Loan structure
Second Charge Mortgage
A second charge mortgage is a loan secured against your property that ranks behind your existing mortgage. It's the technical name for what's also called a secured loan or homeowner loan.
The 'charge' refers to a legal note registered against your property at HM Land Registry. Your existing mortgage is the first charge — meaning your mortgage lender has the first claim if the property is sold. A second charge sits behind it.
Since the Mortgage Credit Directive came into force in March 2016, second charge mortgages have been regulated as mortgages by the FCA, alongside first charge mortgages. The product is identical to what's marketed as a 'secured loan' or 'homeowner loan' — different names, same thing.
If you ever sell or are repossessed, sale proceeds repay the first charge in full first, then the second charge, and only then any surplus to you. This ranking is what makes the loan 'secured' and is the reason rates are lower than unsecured borrowing.