"Some brokers mistakenly view second charge loans as a last resort for individuals with bad credit or as too niche to consider seriously. Thankfully, perceptions are changing. "
The second charge lending market has been on a steady growth trajectory, presenting new opportunities for brokers and lenders alike. Recent figures from the Finance & Leasing Association (FLA) reported a third consecutive month of double-digit new business growth by both value and volume in September. In the nine months to September 2024, new business volumes were suggested to be 16% higher than in the same period in 2023. This growth reflects the increasing demand for second charge products and an evolving landscape where innovation and customer-centricity are driving success.
As more brokers adopt technology, they can provide their clients with a seamless and efficient experience. This improved speed and quality of service ensures clients enjoy a quicker, smoother process, enhancing the customer experience and delivering consistently better outcomes — key factors contributing to the credibility and growth of the wider second charge sector.
What brokers need to know about the current second charge lending landscape
Second charge mortgages can be a good solution for some homeowners. The most common scenario is where borrowers want to release equity from their property to lower the cost of unsecured borrowing. Many second charge lenders can directly settle existing debts with the proceeds of the new loan, allowing a more realistic view to be taken when affordability is assessed. A second group of borrowers needs the flexibility to increase the size of their mortgage without refinancing an existing first charge, possibly to avoid early redemption charges. Some borrowers are attracted by the speed and simplicity of the second charge mortgage process, especially where funds are needed urgently.
Despite the positive momentum, misconceptions about the second charge market still exist. Some brokers mistakenly view second charge loans as a last resort for individuals with bad credit or as too niche to consider seriously. Thankfully, perceptions are changing.
Another important factor is funding stability. Every lender in the market is funded differently, and brokers must work with partners who have a secure and stable funding model. A strong, dependable lender ensures that customers receive the support they need without unexpected interruptions or risks.
Understanding regulatory requirements continues to be crucial. Second charge loans are not regulated differently from first charge mortgages, and knowing they are subject to the same stringent controls should offer brokers and customers alike reassurance about the products on offer, and the lenders they’re dealing with. And by understanding the broader financial market, brokers can bring valuable insights to their clients, helping them make informed decisions.
The emergence of new lenders is also providing the intermediary market with a broader range of options, ensuring that clients have access to solutions tailored to their needs. As more lenders enter the market, the more brokers and consumers are taking notice, helping to raise its profile, advancing innovation and encouraging healthy competition.
Lessons from our launch journey
Our own launch has taught us several valuable lessons that could benefit others considering entering the market.
Invest in the best people: It may seem obvious but having a knowledgeable and experienced team is critical. Market experts bring invaluable insights and can help navigate the complexities of the second charge sector.
Empower your team: Once you have the right people in place, give them the freedom to do what they do best. Listen to their advice and trust their expertise.
Don’t be afraid to innovate: In a competitive market, standing out is essential. Brokers need to see a clear reason to partner with you. Innovation, whether in product design or service delivery, sets you apart from competitors.
You don’t need to reinvent the wheel: This may sound somewhat contradictory to the above point, but innovation doesn’t always mean creating something entirely new. Sometimes, it’s about enhancing existing services and making improvements that benefit the customer experience.
After less than six months operating in the market, we’ve supported over 3,000 customers, lent over £100 million, and achieved a 4.8 rating on Trustpilot. Our commitment to speed has seen over 50% of our cases completed within just nine days, and, without any dilution of credit standards, some clients have finalised their loans on the same day their applications were submitted. These results demonstrate the potential of second charge lending, and we’re excited to continue supporting brokers with fast, reliable, and customer-focused solutions.
By embracing technology, ensuring good customer outcomes, and delivering responsible and accessible solutions, we believe that the second charge market will continue to thrive. As more brokers are open to including second charge products in their portfolio, they’ll find that they can better serve their customers and grow their business in this expanding segment of the mortgage market.
