2 October 2026 | Written by Shideh Mirashrafi
Can I raise money for my business without remortgaging?
Yes. If you own a home with an existing mortgage, a second charge business loan may allow you to raise funds without replacing that mortgage. You take out a separate loan secured against your property, subject to sufficient equity and the lender’s assessment. Your home is at risk if you cannot repay.
For business owners, the question often starts with a practical need: buying equipment, taking on larger premises or funding the next stage of growth. If your current mortgage works for you, replacing it to raise additional money may not be your preferred option.
A Homeowner Business Loan is one route to explore. Before proceeding, it’s important to understand how the borrowing works, what it costs and how you will repay it.
How does borrowing without remortgaging work?
Remortgaging involves replacing your existing mortgage with a new one. A second charge loan sits alongside it instead.
Your original mortgage remains the first charge against your property. The additional lender takes a second charge, ranking behind the first lender when money from a repossession sale is distributed.
You have two separate borrowing agreements, each with its own terms. Keeping your mortgage in place does not remove your obligations under it, and you must also meet the requirements of the new loan.
Read our guide to how second charge loans work.
Why might a business owner want to keep their existing mortgage?
You may have a mortgage rate you want to retain or face an early repayment charge if you leave your current deal.
Borrowing separately can avoid replacing the whole mortgage balance simply to access additional funds. However, a second charge loan is not automatically cheaper. Its interest rate, fees and repayment period could outweigh the savings from keeping your mortgage.
Ask for a comparison of the overall cost of each suitable option, rather than deciding on the monthly payment alone.
Homeowner Business Loan vs remortgaging
|
Consideration |
Second charge Homeowner Business Loan |
Remortgaging to raise business funds |
|
Existing mortgage |
Stays in place |
Replaced with a new mortgage |
|
Additional borrowing |
Separate agreement |
Included in the new mortgage, if approved |
|
Interest rate |
Separate rate for the additional loan |
New terms apply to the replacement mortgage |
|
Costs to compare |
New loan interest and fees, alongside existing mortgage costs |
New mortgage costs and any charges for leaving the existing deal |
|
Business purpose |
Must meet the business lender’s criteria |
Must be permitted by the mortgage lender |
|
Security |
Additional borrowing is secured against your home |
Replacement mortgage is secured against your home |
The right comparison depends on how much you need, how long you need it for and when your current mortgage deal ends.
How does the equity in your home affect borrowing?
Equity is the difference between your property’s value and the borrowing secured against it. Having equity does not mean all of it is available to borrow.
Illustrative example: A home worth £400,000 with an outstanding mortgage of £220,000 has £180,000 of equity. Adding a £50,000 loan would bring total secured borrowing to £270,000, equivalent to 67.5% of the property’s value.
This is a simplified calculation, not a lending offer. It excludes fees, any interest added to the balance and other secured borrowing. A lender will also need to assess the property, your circumstances and repayment arrangements.
What could the funds support?
Potential business purposes include equipment purchases, stock, expansion and improvements to business premises. The intended use must meet the lender’s criteria.
Start with a clear explanation of what the spending will achieve. For example, if new machinery would increase production, consider installation time, running costs and how long it may take for additional orders to generate income.
The funding requirement and repayment plan should work together. A projected increase in sales is not the same as money available to repay a loan.
What should you check before borrowing?
Before making a decision, ask:
- What is the total amount repayable, including interest and fees?
- Are payments required monthly, at the end of the term, or both?
- If a balance remains at the end, what will repay it?
- Could you meet your obligations if business income fell or customers paid late?
- What happens if a planned refinance or asset sale is delayed?
- What charges apply if you repay early?
It can help to write down a realistic downside scenario alongside your expected outcome. For example, work through what a three-month delay in the planned business benefit would mean for your finances.
Are there alternatives to consider?
A further advance from your existing mortgage lender may be an option, provided it accepts the business purpose. This means additional borrowing from that lender, usually with its own rate and terms.
You can also explore business funding that does not require a charge over your home. Check the full agreement, including any personal guarantee or other security requirements.
Remortgaging may still be worth comparing, especially if your existing deal is approaching its end. A suitably qualified adviser can help you assess the available routes.
How can Mercantile Trust help?
Mercantile Trust offers Homeowner Business Loans of £25,000 to £500,000 as second charge borrowing, with bridging and term options available. We assess applications manually, including cases involving self-employment or previous credit problems. Approval depends on the individual circumstances.
The regulatory status of a loan depends on the individual circumstances of the application. This article is for general information and does not constitute financial or legal advice.
Our loan products are not regulated by the Financial Conduct Authority.
Subject to status and lending criteria
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Reviewed by: Tara Evans, Chief Executive
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