When you’re looking to raise money against your home-whether for home improvements, debt consolidation, helping family, or funding a business-it’s important to understand all the mortgage options available.
As a homeowner, you may come across terms like remortgage, further advance, or second charge mortgage, and it’s not always clear which route is best.
Mortgage advisers must follow strict FCA (Financial Conduct Authority) rules known as MCOB (Mortgage Conduct of Business). These regulations ensure you receive clear, fair, and suitable mortgage advice from an FCA-regulated mortgage broker.
As part of this process, advisers must consider all appropriate alternatives before recommending additional secured borrowing.This guide explains how those decisions are made-and when a second charge mortgage becomes the right solution.
How Mortgage Advisers Assess Your Borrowing Options
Under MCOB and the Consumer Duty framework, advisers must help you compare:
- Further advances
- Remortgaging
- Second charge mortgages (also known as second charge loans or homeowner loans)
Only once the first two routes are found unsuitable can a second charge mortgage be considered.
Step 1: Can Your Current Lender Offer a Further Advance?
The first step if you want to borrow more money is exploring a further advance, which is additional borrowing from your existing mortgage lender.
A further advance may be unsuitable if:
- Your lender declines the additional borrowing
- The amount you need exceeds what the lender is willing to provide
- The rate offered is significantly higher than market alternatives
Step 2: Assessing Whether a Remortgage Is Suitable
A remortgage is usually the second option explored because it can offer competitive rates and simplify your borrowing. However, a remortgage may not be the best option if:
- You would lose a low fixed-rate mortgage or favourable tracker rate
- You would incur high early repayment charges (ERCs)
- Your circumstances (income, credit, or employment) no longer fit lender criteria
- The new mortgage deal would be more expensive overall
In these situations, a full remortgage may not be the most cost-effective solution.
Step 3: When a Second Charge Mortgage May Be the Right Choice
A second charge mortgage is a separate secured loan taken out alongside your current mortgage, allowing you to keep your existing deal while raising additional funds.
This option is often suitable when:
- Your current lender cannot offer a further advance
- Remortgaging would result in financial loss
- You want to protect your existing low mortgage rate
- You need more flexible underwriting than mainstream lenders offer
Many homeowners explore a second charge when they have a good first-charge mortgage rate they don’t want to disturb.
Affordability & Suitability Checks: What to Expect
Just like a standard mortgage, all second charge lenders must complete:
- Affordability assessments
- Credit checks
- Suitability checks
- Full disclosure through an ESIS (European Standardised Information Sheet)
These requirements ensure any secured borrowing is responsible and sustainable.
Our Role in the Second Charge Process
At Drake Mortgages, we follow a clear, transparent process:
- We assess whether a further advance meets your needs.
- If not, we look at your remortgage options.
- Only if both are unsuitable will we discuss a potential second charge mortgage referral.
We do not provide the second charge mortgage advice ourselves. Instead, we refer you to an FCA-regulated second charge specialist who will carry out the advice and recommendation.
Frequently Asked Questions
Further advance: Additional borrowing from your existing lender.
Remortgage: Replaces your current mortgage with a new deal.
Second charge mortgage: A separate secured loan sitting behind your main mortgage.
A second charge may be suitable if you’d lose a valuable low rate, face high ERCs, or do not meet remortgage criteria.
It depends. For some borrowers, a second charge is more cost-effective or offers better flexibility.
Yes. A second charge mortgage may still be an option.
Yes-second charge loans follow the same MCOB guidelines as standard mortgages.
No. We identify whether it’s an appropriate route, then refer you to a specialist adviser for the regulated advice.
Final Thoughts
Choosing between a further advance, remortgage, or second charge mortgage can feel overwhelming, but you don’t need to make the decision alone. By following FCA-regulated processes and assessing each option in a structured way, we ensure you receive clear, fair, and suitable mortgage advice tailored to your circumstances.
A second charge mortgage is never the first option-nor should it be. But in the right situation, especially when you want to protect a competitive mortgage rate or when your current lender cannot assist, it can be a smart and cost-effective solution.
Our role is to guide you through the decision-making process, explain every alternative, and make sure you fully understand the implications of any additional secured borrowing. And if a second charge is the most suitable route, we will connect you with a trusted FCA-regulated specialist who can provide the dedicated advice you need.
Your home is your biggest financial asset. Taking time to explore your options properly ensures you make a choice that supports your long-term financial wellbeing.