Can you remortgage if you already have a secured loan?

What happens to the secured loan when you remortgage?

It does not disappear because you change your main mortgage. The application and legal work must deal with it explicitly.

A product transfer means changing your deal with your existing mortgage lender. It is different from moving the mortgage to another lender. Availability and conditions vary.²

Before requesting quotes, tell the adviser what you want to achieve. Reducing overall costs, changing the payment date and raising extra money are different objectives.

Option 1: Keep the secured loan when you remortgage

You may be able to replace the main mortgage while retaining the existing second charge loan. Not every mortgage lender accepts this arrangement. The new lender will need to consider the continuing secured loan payment as part of its assessment.¹

Ask the adviser to check lender policy before submitting a formal application. Keeping the second charge may avoid repaying it during an early repayment charge period, but it also preserves its existing costs and commitments.

You would still have two repayments after completion. Compare their combined amount and check when each rate could change. A new fixed mortgage rate does not fix the rate on a separate secured loan.

What is a deed of postponement?

The new mortgage lender will normally require first priority for its security. If the existing second charge remains, the conveyancer needs to establish how that priority will be preserved.

For properties in England and Wales, this can involve the secured lender agreeing to postpone its charge behind the new mortgage. HM Land Registry accepts a qualifying letter or deed of postponement. Required consents and title restrictions also need checking.³

The word “postponement” concerns legal priority. It does not mean your loan repayments are postponed.

Scotland and Northern Ireland have separate property registration systems. Your solicitor should confirm the appropriate documentation and ranking arrangements for the property's location.^{4, 5}

Can the secured loan lender refuse?

Do not assume consent is automatic. Ask what the existing lender requires and whether the amount, terms or purpose of the new mortgage affect its decision.

If an essential consent or priority arrangement cannot be obtained, that proposal may not proceed. Ask the adviser to revisit the options before incurring further costs. A favourable mortgage quote does not settle the separate legal question.

Option 2: Remortgage to repay both debts

A larger new mortgage can, if approved, repay the main mortgage and secured loan together. This replaces the existing debts with new borrowing. The debt remains secured against your home.

Request redemption statements for the loans being repaid. A redemption statement gives the amount needed to settle an account, including relevant interest and charges. It can differ from a balance shown on an ordinary statement.⁶

Here is a simple example using illustrative settlement figures:

A new mortgage of £225,000 would represent approximately 64.3% of the property's value, before any new fees or extra borrowing.

If you kept the £35,000 secured loan and replaced only the £190,000 mortgage, total secured debt would still be £225,000. Moving debts into one account does not itself reduce the amount owed.

These figures are not a lending limit, an offer or an interest cost comparison. They show why every balance must be included.

How will the existing loan affect eligibility?

The lender needs a clear account of which debts remain and which will be redeemed. For ordinary regulated mortgage borrowing, affordability depends on income, expenditure and relevant future changes. Equity does not replace those checks.⁷

Expect questions about your mortgage payment, secured loan, other credit, household costs and income evidence. Disclose any payment difficulties or changes expected before completion.

Lenders will also assess the property and applicable loan to value limits. If you keep the secured loan, ask how the new mortgage lender treats the combined borrowing. Do not assume that a low first mortgage balance means the second charge is irrelevant.

A fall in property value can make remortgaging harder. Negative equity means the borrowing secured against the property exceeds its value.⁸ If the figures are close, use the lender's valuation rather than relying on an estate agent's asking price estimate.

Approval for your existing loans does not guarantee approval now. Your finances, the property and lending criteria may have changed.

Will combining the loans save money?

It might, but a lower rate on the secured loan portion does not answer the question. You are also changing the deal on the larger main mortgage balance.

In the example above, you would be changing the arrangement for £225,000 of debt to refinance a £35,000 secured loan. Ask whether the resulting cost across the whole balance is better for your intended borrowing period.

Make the comparison from today. Fees already paid and irrecoverable do not become new savings because you switch. New fees and settlement charges do belong in the comparison.

Watch what happens to the remaining term

Suppose the secured loan has six years left, but you are considering placing its balance into a mortgage repayable over twenty years. A lower monthly payment would partly reflect taking much longer to repay that debt.

Ask for a comparison that keeps the secured loan portion on a similar repayment timetable where a suitable arrangement is available. If you choose a longer term, understand the effect on total interest and the age at which the borrowing ends.

If a comparison stops after an initial deal period, request the outstanding balances at that date as well as payments and fees. A smaller amount paid during that period can leave more debt outstanding.

Which fees and charges should you include?

Check each proposal for:

1. Early repayment charges on the existing mortgage and secured loan.
2. Mortgage product or arrangement fees.
3. Broker charges and when they become payable.
4. Valuation and legal costs.
5. Any charges for consent or postponement.
6. Account closure or discharge fees.

An early repayment charge depends on the contract and repayment date. Do not assume it ends on the same date as another loan's charge period.⁹

Ask for the new mortgage illustration, often called an ESIS, and a written explanation of costs paid separately or added to borrowing. Added fees can attract interest.¹⁰

The annual percentage rate of charge, or APRC, helps show borrowing costs over the mortgage term under stated assumptions. It should be considered alongside fees, repayment terms and the period you expect to keep the deal.¹¹

What if you also want to consolidate credit cards or loans?

Treat that as an additional decision. Repaying a secured loan through a mortgage keeps an existing secured debt secured. Adding credit card or personal loan balances introduces home security to debts that may previously have been unsecured.

The adviser should consider the costs of extending repayment and relevant alternatives, especially if you are already having difficulty paying. A lower monthly total does not necessarily mean a cheaper or suitable arrangement.¹²

Think carefully before securing other debts against your home.

Ask for the comparison both with and without the additional consolidation. That separates the effect of changing the mortgage from the effect of borrowing more.

How to prepare before applying

Gather the mortgage and secured loan statements, rate information, charge expiry dates and remaining terms. Ask the broker which income and bank documents are required for the proposed application. Requirements depend on your circumstances.¹³

Explain whether you expect to move, retire, reduce working hours or receive money you plan to use for repayment. Those plans can change which features matter.

Ask the adviser and conveyancer to confirm:

1. Which debts will be repaid and which will remain.
2. Whether the new mortgage lender accepts the arrangement.
3. What consent or priority work is needed.
4. The net costs and outstanding debt under each option.
5. What remains outstanding before completion can take place.

Keep paying existing accounts until settlement has been confirmed and follow the lenders' payment instructions. An application or offer is not proof that an account has been repaid.

If a remortgage is not suitable

Ask your current mortgage lender about available product transfers, and discuss whether keeping the present arrangements is reasonable. A simpler process is not necessarily the cheapest option, but it deserves comparison.

If you are struggling with repayments, contact the lenders and seek free debt advice. MoneyHelper's debt advice locator can help you find support.¹⁴

Habitat Loans introduces customers to Loans Warehouse for mortgage advice and arranging services. Tell the broker about the existing secured loan at the first conversation, and ask for the recommendation to explain both the cost and the legal feasibility of the proposed arrangement.