What is a second-charge loan?

What a second charge is

A second-charge loan is borrowing secured against a property that already has a first-charge loan on it. The new lender takes a charge that sits behind the existing one — a second charge — so the property carries two loans at once. It lets you raise money against the value left in a property without repaying or disturbing the first-charge loan already in place.

How the ranking works

The order of charges decides who gets paid first. If the property is ever sold to repay the debts, the first-charge lender is paid in full before the second-charge lender sees anything. That puts the second-charge lender further back in the queue and at more risk, which is reflected in their terms. They will also look closely at how much value is left over and above the first-charge loan.

When it fits

A second charge suits situations where you want to raise money against a property but do not want to touch the first-charge loan — perhaps because it is on good terms, or repaying it early would be costly. Investors use it to release capital for another project; businesses use it to raise funds against premises they already have borrowing on. As always, the lender will want a clear exit.

See if a second charge fits

Whether a second charge is the right way to raise the money depends on the property and the loan already on it. Housn Capital introduces you to a specialist broker who can weigh it up and match you to a lender comfortable with second-charge lending. Tell us about your deal to get matched.

Frequently asked questions