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2nd Charge Mortgage LTV

The key information you need to know about second charge mortgage loan to value ratios.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 27th August 2019 *

A second charge loan can offer an alternative route for finance, especially in instances where remortgaging isn’t an option. 

That’s why many homeowners come to us for advice and tips on how to get competitive second charge mortgage loan to value ratios. 

After all, if you’re applying for a loan secured against your home, you want to be sure that you’re getting a good deal.

If you’re considering getting a secured loan against your property, read our guide below for the key information you need to know and where to turn for advice.

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If you would like to talk to someone now about how to get the best second charge LTV (loan to value) rates, make an enquiry here. 

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What LTV ratio can I expect on a 2nd charge mortgage?

Every lender has different criteria that they use to work out the loan to value ratio they’d be willing to accept for a second charge mortgage, as well as how much you can borrow on one, but the equity you hold in your property is the most important factor they will consider.

Up to 75% is ubiquitous with a few willing to go higher, some even to 100%.

Note that all 2nd charge lenders calculate the LTV from the value of the existing mortgage and the proposed 2nd charge combined.

How does equity affect LTV on a second charge mortgage?

Usually the more equity you hold, the more you can borrow. This is because if you should fail to pay off your loan and the property is repossessed and sold,  the equity would be used to settle the debt. 

Of course, your initial mortgage will take priority and the equity would be used to pay off that debt first. Anything left over after paying your first loan would then be used to pay off your equitable second charge loan.

How do I work out how much equity I hold?

The following example should put this into context and help you determine how much you could potentially borrow on a 2nd charge mortgage...

Let’s say you bought a house for £200,000. You put down £20,000 as a deposit and borrowed £180,000 to pay the rest.

Over a few years, you’ve managed to pay £20,000 off your mortgage, which lowers your debt to £160,000. In the same time period, the house’s value has increased to £220,000.

This means your equity in the house is £60,000 (£220,000 less £160,000).


What else affects the LTV rate that I am offered for a second charge mortgage?

There are so many variables that can affect the second charge LTV rate that a lender may offer you including:

  • Your credit history
  • The property type you want to secure your loan against 
  • Your age (some lenders have maximum age caps.)
  • If the second charge will be on a residential or buy to let property

This can make it difficult to predict how much you can borrow as well as how much your second charge loan will cost you, especially if you lack access to each of the lender’s rates.

This is why working with a mortgage broker who specialises in second charge LTV rates can help. 

They will have knowledge of the lenders that are more willing to accept you, as well as the rates and terms that they may be prepared to lend to you under. 

For more advice on this, make an enquiry and we’ll refer you to one of the second charge loan experts to give you the right advice. 


What second charge LTV rate can I get if I have ‘bad credit’?

Firstly, we have helped lots of borrowers with ‘bad credit’ find a second charge mortgage, even for higher LTV rates including 85% and 90%. 

A lot of homeowners believe that they can’t get second charge loans with higher rates and there are also those that avoid applying altogether because of fear of rejection. 

However, depending on your circumstances and through working with a broker,  it could still be possible for you to get a secured loan with a good LTV rate.

Will I be offered a lower LTV rate with ‘bad credit’? 

You may find that some lenders limit the LTV when lending to a customer who has accumulated debt or has credit issues on their file. 

This is because borrowers with a history of mismanaging finances are seen as more likely to miss their payments.

There are lenders who can take other factors into consideration, however, most will limit their lending to 65% of the property’s value.

It’s important to remember that different lenders will assess the various forms of ‘bad credit’ differently, so just because one offers you a lower LTV rate, it doesn’t necessarily mean that another will. 

Some will take the severity and date of the ‘bad credit’ into consideration when thinking about which LTV rate to offer you. 

If you’d like to speak to someone directly for advice about how to get a good LTV rate for a second charge loan, make an enquiry here. 

Alternatively, see our ‘bad credit’ section here for more information. 

How can I find the best second charge mortgage loan to value ratios?

We’ve helped lots of people find experts who can find them suitable lenders for second charge mortgages with various loan to value ratios, including high LTV deals, under the right circumstances.

Can I get a second charge mortgage with 85-90% LTV?

By working with a professional who understood their needs as well as the available rates on the market, many homeowners were able to successfully apply for second charge loans with LTV rates from 85-90% and even as high as 95% and up.

The requirements for any given individual can be complex and no person that comes to us has an identical situation. Generally speaking, though, higher LTV deals are reserved for customers who are perceived as lower risk to the lender, and the level of risk could potentially be assessed based on everything from the borrower’s credit rating to their income type.

Some lenders lack the experience necessary to be able to conclude whether or not they can lend to you which can result in lower LTV ratios or higher interest rates.

A broker can connect you to the lenders that are worth your time and money.


Can I get a second charge mortgage with a 100% LTV rate?

Only in exceptional circumstances will a lender consider loaning a second charge mortgage with a 100% LTV.

Most lenders prefer to loan smaller amounts which is why usually, the higher the loan, the higher the interest rate. This is because a larger loan brings greater risk to the lender as if the borrower defaults on their loan, the lender could lose money.

This is not always the case and there may be lenders who are willing to offer higher loans to homeowners with a lot of equity, a higher income or a clear credit history.

To speak to an expert about how you could get a second charge mortgage with a higher LTV, click here. 


What should I consider when comparing second charge LTV ratios?

A second charge loan is a huge financial decision that should never be taken without careful consideration for you financial future. 

Always keep in mind that a second charge loan is secured against your home and therefore if you miss payments, your home could be repossessed. 

What else should I consider?

  • Any fees associated with applying or taking out the loan. Check the terms and conditions of your loan agreement and ask for any fees or charges to be highlighted to you before signing.

  • Consider your other options. Is remortgaging an option? Are there any other forms of finance that might be more viable?

  • Can you afford to pay your mortgage payments as well as your second charge loan payments? 


How can a mortgage advisor help me?

Working with a mortgage advisor can help you access hundreds of second charge LTV rates, some of which may not even be directly available to the public. As well as this, a mortgage advisor can:

  • Check your contract - A broker can make you aware of any charges or penalty fees that you might be required to pay in the future or through taking out the loan

  • Save you time - The advisors we work with can manage any paperwork on your behalf and ensure that it is sent to the correct departments / authorities. 

  • Highlight the lenders worth your time -  Wading through multiple lenders is time consuming to say the least but the advisors we work with can filter out any lenders who are less likely to approve you and cut to the ones that are more suitable.

  • Negotiate better terms - We only work with trusted advisors with extensive knowledge about the rates and terms of each lender. This knowledge allows them to quickly compare LTV rates and negotiate better terms where possible.


Talk to a second charge mortgage expert about LTV ratios

The advisors we work with are OMA Accredited and have also undergone an LIBF Training course. These things ensure that the advice you receive helps you get the best possible second charge LTV rate.

To speak to an expert about how to get a second charge mortgage with LTV that works for you, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

We don’t charge a fee and there’s absolutely no obligation to proceed or marks on your credit rating.

Updated: 27th August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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