Second charge mortgage regime


Produced in partnership with Pinsent Masons
Practice notes

Second charge mortgage regime


Produced in partnership with Pinsent Masons

Practice notes
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Authorisation requirements for second charge mortgage business

Any business carrying out a regulated activity must be authorised under the Financial Services and Markets Act 2000 (FSMA 2000), unless they benefit from an exemption or an exclusion. This includes lenders, administrators and intermediaries carrying on second charge mortgage activities.

For more information on the authorisation process, see Practice Note: FCA and PRA authorisation under Part 4A of FSMA 2000.

Second charge mortgages defined

A regulated second charge mortgage is a loan secured on a borrower’s property that is used as, or in connection with a dwelling and already subject to a first ranking charge mortgage. A second charge mortgage is subordinate to a first charge mortgage and in the event of default, a second charge lender's interest in the proceeds of realising the property will only arise once the liabilities owing to the first charge lender have been satisfied.

Second charge lending is used for a number of reasons including debt consolidation and to fund home improvements. Second charge lending can also be used as an alternative to larger,

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Jurisdiction(s):
United Kingdom
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Key definition:
Borrower definition
What does Borrower mean?

The party to whom an asset-based lender or receivables financier make a loan facility available.

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