The Intermediary – October 2026 - Flipbook - Page 56
SECOND CHARGES &
THE COST OF LIVING
In Numbers
Alongside the possibility of paying more
over a longer term sits a more fundamental
consideration: debt that was previously unsecured
is being converted into borrowing secured
against the customer’s home.
£2.14bn
Value of second charge mortgage
lending in 2025, the highest since 2008. (FLA)
Lau explains: “The main risk is that borrowers
are moving unsecured debt onto borrowing
secured against their home and so, if repayments
are not maintained, their property could
£2.38bn
Value of new business in the
second charge mortgage market over the 12
months to July 2026. (FLA)
ultimately be at risk.”
Tolfree similarly highlights the risks associated
with repeat consolidation, adding: “If someone
keeps accumulating unsecured debt and
refinancing it against their home, that may
41,760
Second charge agreements written
in 2025, up 17% on 2024. (FLA)
58.3%
Proportion of second charges used
solely for debt consolidation in 2025. (FLA)
indicate financial difficulty or vulnerability, even
if the affordability calculation says they can
technically afford the loan.”
Stay or go
The decision to improve rather than move has
become another important part of the story.
FLA figures show that 35% of second
23.0%
Proportion used for home
improvements and loan consolidation, with
12.0% solely for home improvements. (FLA)
£51,300
improvements, either as their sole purpose or
alongside debt consolidation. A survey from
MyBuilder found 26% of homeowners were more
likely to renovate than relocate because of the
financial climate.
Approximate average second
charge advance in 2025. (FLA)
71%
charge agreements in 2025 involved home
Wilkins says: “Although purchase activity
remains steady, cautious clients are increasingly
opting to upgrade their current properties to buy
time rather than move.”
Proportion of renovating homeowners
who plan to stay in their home for at least 11
years following the renovation. (Houzz)
For homeowners who already have the schools,
transport links, community and location they
want, moving simply to gain more space can be
an expensive and disruptive solution.
Tolfree says: “Once you factor in Stamp Duty,
22%
Homeowners renovated due to changes
in income or employment (Houzz)
legal fees, removals and potentially giving up a
good existing mortgage deal, you can understand
why. A second charge can provide the money for
an extension, renovation or adaptation, while
£22,106
Amount homeowners are
estimated to save by renovating instead of
moving. 58% thought improving their property
was more economical. (Smart Energy GB)
55%
leaving the first mortgage exactly where it is,
assuming of course that the additional borrowing
is affordable.”
Chambers says: “If a family already has the
location, schools and community they want,
moving simply to gain another room can feel like
an expensive way to solve a space problem.
Adults reported that their cost of living
increased compared with a month ago – a
decline from 79% in April 2026. (ONS)
"An extension or loft conversion may allow
them to make the home work better without the
disruption and transaction costs of moving.
“The project and the borrowing both need
to stand up financially. We should not assume
28%
More than a quarter of households
cannot afford an unexpected but necessary
expense of £850 (Carnegie UK)
that every pound spent on improvements will
translate into an equivalent increase in the
property’s value.”
Norton Broker Services is currently seeing
enquiries from homeowners seeking to invest in
