Second Charge Mortgage Calculator: Fast & Free Second Mortgage Calculator
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Our second charge mortgage calculator can be used to quickly calculate your how much your repayments might be, should you take on a second charge.
To find out your borrowing costs, simply enter the amount you want to borrow, your desired loan term and the interest rate and our calculator will do the hard work for you.
Monthly Costs
USING THE CALCULATOR
To help you to work out your likely monthly repayments, we have built our secured loan calculator.
The calculator will give you your monthly repayments, based on the amount borrowed, the term of the loan and the interest rate.
If lender arrangement fees and/or broker fees are to be added to the loan then an amount to cover these should be included in the loan amount section to get a more accurate guide.
How to use our calculator:-
- Enter your loan amount
- Input the interest rate (either a whole number, or with decimal places).
- Enter the term of the required homeowner loan in years.
- Press ‘calculate’ and the calculator will show you your monthly payment.
Evaluating Your Borrowing Power with a Finance Calculator
The maximum you can borrow using this type of finance is capped at 95% loan to value (LTV). Most second charge mortgage providers cap borrowing at 90% loan to value.
It’s important to understand that the maximum LTV on these mortgages is calculated using the combined total of both the amount you’ll owe on your 1st charge and 2nd charge mortgages.
On paper, the upper limit for a second charge mortgage loan is very high – most lenders will be willing to lend up to £2,000,000, if their borrowing criteria are met. In reality, your maximum loan depends on how much equity you have in your home and your income.
Factors That Impact How Much You Can Borrow
As mentioned above, the key factors that impact how much you could borrow are:
- Loan to value – You can borrow a maximum of 95% of your current property value. Lenders tend to have interest rate bands depending on the LTV you require. This means that lower LTVs may come with lower rates, so keep an eye on the deals to save money.
- Your income – Your income is key to deciding your maximum loan. The loan must be affordable according to your chosen lenders criteria. If you want a fast, free assessment, get in touch and our advisors will be able to advise you how much you could borrow based on your income.
- Use of funds – When borrowing money using second charge mortgages, you must be able to account for what you plan to do with the money. If you can only account for (for example) £50,000, then your borrowing is likely to be capped at this level.
- Your credit history – In some cases, your credit history may limit how much money you can borrow from a given lender.
Using a Mortgage Calculator to Assess Repayments
The repayment will depend upon three primary factors:
- How much you borrow
- The length of the second charge mortgage term
- What interest rate the lender offers you
Longer terms typically mean lower monthly repayments and may even lead to a lower interest rate. However, as you will be paying interest for a more extended period, the loan will cost you more over the full term.
For example, let's assume you are looking to borrow £40,000 at an interest rate of 6.6%. This would lead to monthly repayments and a total repayment cost as follows.
| Repayment Term | Monthly Repayment | Total Repayable | Cost of Loan |
|---|---|---|---|
| 5 years | £780.93 | £46,855.83 | £6,855.83 |
| 10 years | £452.33 | £54,279.54 | £14,279.54 |
| 15 years | £346.43 | £62,357.67 | £22,357.67 |
| 20 years | £296.08 | £71,058.16 | £31,058.16 |
| 25 years | £267.80 | £80,339.23 | £40,339.23 |
Most lenders will allow a term of up to 25 years, though if you are older than 46, and thus likely to retire before the conclusion of a 25-year period, you may only be offered a shorter repayment schedule.
Be aware that these numbers are only related to the loan and interest. Most second charge mortgage applications will also accrue additional fees, most notably administrative costs incurred by the lender.
These will be comparatively minor and attached to the total sum repayable, but may slightly increase the amount you pay each month.
Analysing Costs Based on Your Existing Mortgage
It’s important to remember that second charge mortgage sit alongside your existing mortgage, so your monthly payment will be in addition to your current mortgage.
Our finance calculator gives you just the cost of the new loan.
In many cases, especially where debt consolidation will be taking place, you should also consider the impact of the savings on repayments for your current debts. The average monthly saving for our clients when consolidating debts in this way is over £700 per month.
What are the next steps after using the calculator?
After crunching the numbers on our calculator, you'll have an idea if a second charge mortgage is an option for you. Remember, though, the repayments suggested are can vary depending on the products available.
If you want to proceed with a second charge mortgage, contact your existing mortgage lender and ask their permission.
As you will be securing a second charge mortgage against a property in which the existing mortgage lender owns a stake, they have the right to refuse. If your mortgage lender has any reason to believe that you will not be able to keep up repayments, they will block your application as they consider it an unacceptable risk against their asset.
Once you have this permission in writing, you are free to apply for a second charge mortgage. You can search lenders yourself, seeking out an offer online, or you can enlist the services of a second charge mortgage broker. While the latter will come at a small cost, your outlay will likely pay for itself multiple times over.Keep reading - Buy to let second charge mortgages.
