The Intermediary – March 2026 - Flipbook - Page 72
S E C O N D C H A RG E
Opinion
Second charge is
here to stay
I
have been around the second
charge mortgage market for
a long time, and have made
dozens of presentations and
been involved in countless
conversations with brokers
about all things second charge. There
was always some confusion about
whether we should talk about second
charge mortgages or secured loans.
Since the sector came under the
purview of the Financial Conduct
Authority (FCA), it is rare now to
hear many brokers talking about a
secured loan.
The regulator rightly believes that
the more apt description is as a second
charge mortgage secured against
a property.
Mentioning second charge
mortgages to customers might have
been met with plenty of blank looks
before the Mortgage Credit Directive
(MCD) over five years ago, but since
it brought first and second charge
mortgages under the one regulator,
it is now the accepted term. In my
view, the name went some way on the
road to a wider acceptance by giving
Not only is there now
a more general acceptance
of second charge as a
genuine alternative to
remortgaging when
clients want to capital
raise, but 2025 proved to
be a record year for new
business in the sector,
both in terms of volume
and case size”
70
The Intermediary | March 2026
it more credibility, particularly when
comparing it with its bigger cousin,
a first charge mortgage. Funny what
changing a few words can do, isn’t it?
There have also been a number of
recurring themes that brokers keep
coming back to and I thought I would
share the most common ones.
LAURA THOMAS
is regional sales manager
at Equifinance
Too expensive?
Rates are at historic lows in the second
charge sector, and it can no longer be
argued that across the board second
charge mortgages are expensive.
Of course, they can never match
the pricing of first charge lenders, but
as second charge lenders secure their
loans as a second charge which carries
added risk, rates charged reflect that
extra risk.
Too complicated?
There used to be some truth in
that second charge mortgages were
administered differently from first
charge mortgages, which could
lead to confusion if they were not
explained properly.
We also had some prey
impenetrable rules on working out
early redemption that did not help
the cause. All of that is gone now and
has been for some time. They are
now probably the most transparent
and simple products to understand
and speak to customers about
with conviction.
Too slow?
The original 14-day cooling off period,
during which lenders and brokers
could not contact their client once
an offer had been made is now just
seven days starting from the moment
a binding offer is made. However,
a client can opt out and complete
the deal at any time within the
seven-day period.
The important thing that needs to
be remembered is that the argument
between second charge mortgages and
remortgages misses the point.
Both methods of raising capital have
their strengths and weaknesses.
As advisers, rather than favouring
one method over another, we
recognise that our job is to make sure
that customers are geing the benefit
of a ‘whole of market’ approach that
plays no favourites, so the advice
received is unbiased and completely
in tune with their needs and
circumstances.
Fresh perspective
A lot can change in a relatively short
time. It was less than three years ago
that the doomsayers were talking
down the second charge sector. It only
took a month’s figures that were not in
line with the incredible advances that
we have experienced in the past few
years for certain talking heads to infer
that the sector was facing a crisis.
Yet the good news keeps on coming.
Not only is there now a more general
acceptance of second charge as a
genuine alternative to remortgaging
when clients want to capital raise but
2025 proved to be a record year for new
business in the sector both in terms of
volume and case size.
The message for 2026 is that
second charge lending is here to
stay. Advisers are already seeing
that, given the right circumstances,
a second charge mortgage can be so
much more of a precision tool than a
full remortgage. ●
