How Many Secured Loans (2nd, 3rd Charge Mortgage) Can You Have on a Property?

As long as you have sufficient income and equity in your home, you can, in theory, have as many secured homeowner loans as you like on a property.

When you take a loan secured against your property, a lender takes a legal interest – called a ‘charge’ – over your home. A legal ‘charge’ means that a lender has a legal right to any proceeds from the sale of your home. They also have the right to take you to court and force your property to be sold if you fail to keep up repayments on any loan that is secured against your home.

‘Charges’ are normally arranged in order of priority. Your mortgage lender will typically have the ‘first charge’ on your home, with a secured lender taking a ‘second charge’. This determines which lenders have first claim over any proceeds from the eventual sale of your property.

In theory, as long as you have sufficient equity in your home, you can take out as many secured homeowner loans as you like on your property. Each new lender will take a further legal ‘charge’ over your home, although each time they will take a lower ‘charge’ over your property. In effect, they are getting in the queue behind the earlier lenders for payment of their loan when the property is sold.

Each existing lender will normally have to give their permission for a subsequent homeowner loan to be secured on your property. Some lenders will also only lend on a ‘second charge’ or ‘third charge’ basis.

It is likely that you will pay a higher interest rate on each subsequent secured homeowner loan that you take. This is because each subsequent lender has less of a legal claim on the proceeds from the eventual sale of the property than the existing lenders. As they are less likely to be able to reclaim their money if you fail to keep up your repayments (as they are further back in the ‘queue’) the lending is riskier, and the interest rate will be set accordingly.

To use your home to raise money at a competitive APR, please fill this homeowner loan form.