The Intermediary – January 2026 - Flipbook - Page 60
S E C O N D C H A RG E
Opinion
A winner in 2026
for advisers
T
here are many factors
involved in the rise
of second charge
mortgages. Apart from
the ebbing of negative
sentiments towards
the channel which has been down to
a concerted campaign to educate the
intermediary market over the past
few years, there has been a series of
changes that are having a positive
effect on how brokers perceive the
second charge channel.
In 2025, more than 1.8 million fixed
rate mortgages matured by the end of
the year. Remortgages have therefore
inevitably been a major driver for new
business during the year. However,
the uncertainties caused by the global
financial situation have also meant
that many people have looked at
spending money on their existing
properties rather than moving house
to deal with expanding families and
other requirements.
The need for money to finance
home improvements and also funds to
consolidate loans and other credit has
meant that there has been a greater
focus on other sources than straight
remortgaging. Second charge funding
has become a serious challenger as a
flexible source of finance that does not
disturb a client’s existing first charge
mortgage.
People with cheap fixed rate
mortgages should be more reluctant
to remortgage out of a cheap fixed rate
into a more expensive alternative,
just to raise capital without exploring
the alternative of a second charge
mortgage, with the help of their
financial adviser.
This is a crucial part of the
transaction. Every adviser should be
able to assess a client’s needs without a
bias towards either remortgaging or a
second charge option.
Consumer Duty puts the onus
squarely on advisers to consider every
option for their clients before making
a recommendation. Do clients get to
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The Intermediary | January 2026
see all of the options set out in front of
them to understand why the adviser is
advising a certain route?
In the real world, it is unlikely that
many clients get to see how advisers
reach the decision as to what to
recommend. They are usually just
given the recommendation without
any aempt to show alternatives
or how the recommendation was
arrived at.
There is nothing particularly
wrong with that approach provided
the adviser can explain – if asked
– whether there are alternative
approaches, what they are and why
they have been discounted from the
final recommendation.
Personally, I would like to see
brokers offering their clients all the
alternatives first and then explaining
why they have decided on their choice
of recommendation. Of course,
this isn’t a perfect world and while
I can wish all I want, many brokers
can claim with some justification
that there is just not enough time
to enter into long explanations as to
the merits of each alternative. Aer
all, the service offered by advisers is
predicated on the assumption that
they have already done the necessary
research to reach a recommendation,
so why should they have to explain
how they arrived at their conclusion?
Prospects for 2026
Amid all the negative press which
continues to swirl around, including
regional conflicts such as Ukraine
where a resolution still seems a long
way away as I write, the poor state of
the world economy and closer to home
the almost daily negative news about
the state of the country, I still feel that
there is much to look forward to in
2026, especially in the second charge
sector.
2025 ended on a high with a circa
20%-plus increase in new business
volumes over the previous year and
from my experience of working in
LAURA THOMAS
is regional sales manager
at Equifinance
the sector over the past 10 years, the
momentum that has been building up
over that time is now undeniable.
Changes in regulatory
responsibility, smarter product design
and interest rates which have moved
closer than ever to their first charge
sibling in 2025, have all had a positive
effect on the increase in second
charge lending.
For me though, the main driver
behind the inexorable rise in new
second charge business has been
about the wider acceptance of second
charge among the intermediary base.
Ongoing education by lenders and
packagers has led to wider awareness
and consequently greater confidence
in opting for a second charge option to
the whole issue of capital raising.
As we look forward to a new year, I
predict that second charge lending will
continue to be one of the winners for
intermediaries and their clients. ●
Second charge lending will continue to be a winner
