The Intermediary – September 2026 - Flipbook - Page 77
S E C O N D C H A RG E
Opinion
Choice matters as
the market grows
A
homeowner’s
borrowing needs can
change long before
their mortgage
deal ends. They
may be planning
improvements, reviewing existing
loans or needing to manage an
unexpected expense, while their first
mortgage still works well for them.
The question is not simply how to
raise the money, but whether their
main mortgage needs to change at all.
That helps explain why second
charge mortgages deserve a place in
the wider mortgage conversation.
Finance & Leasing Association
(FLA) June figures recorded a 9% yearon-year increase in new agreements,
an encouraging result for a market
that gives homeowners another option
when they need additional finance.
For someone with a favourable fixed
rate or a large early repayment charge,
that choice can maer. Moving the
whole mortgage to raise a smaller
amount could prove more expensive
than borrowing separately.
The comparison should include
a further advance and unsecured
borrowing, taking account of fees,
interest rates and repayment terms.
Brokers play an important role in
bringing these factors together and
assessing which option best meets
the customer’s needs. A higher rate
on additional borrowing does not
necessarily mean a higher overall cost,
particularly where the customer can
retain a favourable first mortgage deal.
existing higher-priced commitments,
potentially reducing monthly
payments while leaving their first
mortgage in place.
Here, the value of advice is in
establishing what will improve aer
the loan completes. A lower monthly
payment needs to be weighed against
the total cost, the term and the
implications of securing previously
unsecured borrowing against a home.
Understanding why the loans arose
is equally important, particularly
where a customer’s circumstances call
for additional support or alternatives
to further borrowing.
This is where the expertise of FLA
members maers. Close working
between lenders and brokers helps
support responsible lending and good
customer outcomes.
Following the Financial Conduct
Authority’s (FCA) March review,
the FLA has brought members
together to share experience
and explore ways to build on
good practice, including around
affordability, support for customers
in vulnerable circumstances and
information sharing.
Finance is an important part of how
households manage their expenses and
make decisions about their homes.
FAIZAN HAQ
is senior policy manager
at the FLA
Giving people appropriate choice,
backed by specialist expertise and
clear advice, is an important part of
ensuring that finance works for them.
Demand for second charges
continues to grow. While the sector
typically accounts for less than 4%
of regulated mortgage sales, lending
reached £571m between April and
June, up 18% on the same period
last year.
For FLA members and their
intermediary partners, that demand
is an opportunity to help more
homeowners find finance that meets
their needs.
A second charge can allow them to
raise funds without replacing a first
mortgage that still works well.
The value of the market lies
in combining that choice with
responsible lending, specialist
expertise and clear advice – helping
customers make decisions that
work for them now and over the
longer term. ●
Timing matters
Someone with several years le on a
fixed deal faces a different calculation
from someone whose deal is about
to end.
The same care is needed when
the aim is to reorganise existing
borrowing. Loan consolidation
accounted for at least 60% of June’s
new business. For suitable customers,
it can provide a way to restructure
Second charge mortgages deserve a place alongside the choices presented to borrowers
September 2026 | The Intermediary
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