How much can be borrowed and how much will it cost?

How much can be borrowed?

For a loan secured on a residential property, the minimum loan size for a second charge loan is just £10,000 and we arrange loans all the way up to £2.5m.

How long can a loan be taken out for?

Typically a loan is lent out between 3 and 25 years. There are some lenders who offer 30 year terms.

The term of a loan is dependent on several factors, depending on the purpose of the loan.


If a client is borrowing to consolidate his outstanding credit card and unsecured loan balances, saving themselves money each month, then it makes sense to reduce the term of the loan to an affordable level, one that allows the borrower to strike a balance between making monthly savings and clearing down the balance over the shortest term.

If a client is borrowing to buy a vehicle then a maximum loan term of 3-5 years is acceptable.

If the reason for the loan is to extend or improve the client’s property, then a loan term which matches or is less than their mortgage term would be deemed acceptable.

Second charge loan payments, fees and interest rates

Most second charge loans are repaid on a capital repayment basis, but around a fifth of the business written at Y3S is paid on an interest-only basis

Unlike with a first charge mortgage, taking the interest-only option is purely the choice of the client. However there are fewer options available for interest–only borrowers and as a result, the rates are higher.

A broker fee and a lender fee is chargeable on a second charge loan, and can be paid up front if the client requires. However, all fees can be added to the loan and the client need pay nothing up front if they choose not to.

A valuation fee may be chargeable on a residential loan in some circumstances, and is always chargeable where the security is an investment property.

Residential interest rates start at 3.75% which are comparable with mortgage rates. If a client has some adverse credit, then the rate will increase accordingly.

Rates for loans secured on buy-to-let properties start at 4.99%.


For the broker who wishes to remain independent, it is essential to understand when second charge loans will a better financial outcome for the client. It is even more essential to partner up with the correct packager.

Y3S has been a leading UK loans packager for 15 years, and currently hold the title of ‘B2B Broker of the Year’. Our team of 60 people are experts in taking enquiries from mortgage brokers and converting them into second charge loans.

Our second charge loans advisers are trained to a very high standard and they understand that when you send your enquiry to us you expect us to get on with it with the minimum of fuss.

By entrusting your enquiries to Y3S, you can be assured that your client will receive the very best service possible.

The full guide

Part 1: Second Charge Loans - A Broker's Reference
Part 2: How do second charge loans work?
Part 3: How to identify a second charge loan opportunity?
Part 4: The second charge loan process?
Part 5: What property types can be used as security for second charge loans?
Part 6: How much can be borrowed and how much will it cost?
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