Consumer Credit Act

Second mortgages are sometimes referred to as second charge loans. Depending on when they were taken out they will either be regulated by the Consumer Credit Act 1974 or, in the same was as standard mortgages via the Mortgage Credit Directive order 2015.

This can be a complex area of law and advisers who are uncertain should refer to a solicitor or specialist money adviser.

This content applies to Scotland

Loan taken out prior to 21 March 2016

A secured loan or second mortgage taken out prior to 6 April 2008 will only be regulated by the Consumer Credit Act if it was for less than £25,000, or £15,000 if it was taken out before 1 May 1998. On 6 April 2008, the financial limit was removed, meaning that all non-exempted loans became covered by the Consumer Credit Act. [1]

The loan agreement for a loan regulated by the Act should state clearly that it is a 'Consumer Credit Agreement regulated by the Consumer Credit Act 1974'.

Loans taken out after 21 March 2016

Second mortgages taken out after March 2016 are regulated by the Mortgage Credit Directive Order 2015 (which is a European directive) and come under new rules, which mirror the requirements for standard mortgages and which can be found on the Financial Conduct Authority website.

Last updated: 7 February 2020


  • [1]

    s.2(1)(b) Consumer Credit Act 2006 which removes s.8(2) of the Consumer Credit Act 1974. A list of exempted loans can be found in s.16, s.16A and s.16B of the 2006 Act, as amended by s.3 and s.4 of the 2006 Act, and The Consumer Credit (Exempt Agreements) Order 1989 SI 1989/869