The Intermediary – February 2026 - Flipbook - Page 62
S E C O N D C H A RG E
Opinion
Now is the
time to reassess
borrowing needs
T
he beginning of the
year is oen a time for
reflection. It brings
fresh starts, new
goals, and New Year’s
resolutions, some of
which focus on improving personal
finances. Aer the pressures of
Christmas spending, it’s common for
people to step back and reassess their
financial position, considering what
they could do differently to start the
year on a stronger footing.
As a result, in Q1 we typically see a
notable increase in clients looking to
consolidate their debts, and second
charge mortgages are oen a suitable
solution to achieve this.
A fresh look
Statistics from the Finance and
Leasing Association (FLA) consistently
show that second charge mortgages are
primarily used for debt consolidation,
home improvements, or a
combination of both. While this trend
is usually evident throughout the year,
demand is oen more pronounced in
the first few months.
Many households emerge from the
festive period with a desire to simplify
their finances, reduce monthly
outgoings, and regain control early in
the year. When approached correctly,
second charge mortgages can play a
valuable role in helping clients achieve
desired outcomes, without disrupting
an existing mortgage that still works
well for them.
Second charge opportunities
With more lenders entering the
second charge market and criteria
becoming increasingly competitive,
it’s more important than ever for
brokers to recognise when this type of
lending is appropriate and genuinely
adds value for the client. At The Loans
60
The Intermediary | February 2026
STEVE NOBBS
is director at The Loans Engine
Second charges can
play a valuable role in
helping clients achieve
desired outcomes”
Engine, we place a strong emphasis
on opportunity spoing, and we
regularly support brokers through
training and case reviews to ensure
potential solutions for their clients
aren’t overlooked. In practice, there
are several common scenarios where a
second charge mortgage may be worth
considering.
Declined for a further advance:
One of the most frequent situations
we see is where a client has been
declined for a further advance, oen
because the purpose of borrowing
is debt consolidation. Some lenders
are restricted in this area, whereas
second charge lenders are typically
far more flexible. In these cases,
a second charge mortgage can
allow the client to consolidate
debts, reduce overall monthly
commitments, and thus, simplify
their finances – all while retaining
their existing mortgage.
Protecting a preferential rate or
avoiding early repayment charges
(ERCs): Another common scenario
involves clients who don’t want to
remortgage to raise extra funds.
They may be benefiting from a
highly competitive rate or face
significant early repayment charges
if they switch too early. A second
charge mortgage can provide
access to additional funds without
disturbing the client’s current deal.
This oen results in a more costeffective and practical solution than
remortgaging, particularly where
their existing mortgage is currently
fit for purpose.
Unsecured borrowing is not meeting
their needs: Some clients explore
unsecured personal loans but find
they can’t raise sufficient funds or
are offered unfavourable terms. In
contrast, a second charge mortgage
may allow them to borrow the
required amount over a longer
term, oen resulting in a lower
monthly commitment and more
manageable repayments.
A timely reminder
Second charge mortgages won’t be
suitable for every client, but when
used in the right circumstances, they
can play a valuable role in delivering
positive customer outcomes. They can
help simplify finances, ease pressure
on monthly budgets, and provide
clients with a practical route to regain
control of their finances, particularly
at the start of the year, when many are
reassessing their financial position.
For brokers, this reinforces the
importance of considering second
charge lending alongside all other
available options, allowing them
to beer support their clients in
achieving their financial goals. ●
A clear direction for debt consolidation
