The Intermediary – March 2025 - Flipbook - Page 60
S E C O N D C H A RG E
Opinion
Flexibility and speed
with second charge
O
ne of the many
advantages of taking
out a second charge
mortgage is the speed
at which the funds
can be provided to the
borrower. This makes them a useful
and effective capital-raising tool in
situations where the borrower needs to
access funds quickly.
Taking out a second charge
mortgage is oen much faster
than remortgaging. This is mainly
because the application process is
more streamlined than applying for
a standard mortgage, and the loan
amounts are oen smaller.
An additional benefit of applying
for a second charge mortgage is that
there is typically no need to enlist a
solicitor to carry out any legal and
conveyancing work, as the majority
of second charge applications are
conducted by brokers who directly
liaise with lenders.
This, coupled with the fact that
physical valuations are also not
generally needed – as an automated
valuation model (AVM) is usually
more than sufficient – helps to prevent
any back-end delays and allows funds
to be released more quickly, saving
both time and money.
Second charge mortgages have
grown in appeal over the past
few years as the higher interest
rate environment saw consumer
affordability challenged for the first
time in over a decade.
This led to brokers and their clients
seeking an alternative capital-raising
solution to remortgaging, and quickly
realising the benefits of a second
charge loan as a swi and flexible way
of tapping into the equity in their
home without having to touch their
first charge mortgage.
Demand in the sector remains high,
with new business volumes growing
17% in November 2024, according to
the Finance & Leasing Association
(FLA). In fact, the FLA recorded
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The Intermediary | March 2025
growth in the second charge mortgage
market during every month in 2024,
as borrowers sought to capitalise on
the speed and efficiency of this capitalraising tool.
One of the most common reasons
why a borrower takes out a second
charge mortgage is to consolidate
debt. However, there are a number of
reasons why a borrower may need a
swi cash injection, such as to carry
out a home renovation, help a family
member purchase a property, or pay
a tax bill.
Given the ongoing popularity of the
product and the continued demand
for speed and efficiency, it is lile
wonder that there have been a number
of enhancements to the criteria used
to assess second charge applications,
allowing for quicker completions.
This includes using enhanced home
track rules, which reduces the need
for a full valuation on the property
being used as security. Online identity
checks also eliminate the need to wait
for signed direct debit and application
forms to be returned to the broker,
further accelerating the process.
Another recent enhancement is that
completions can also be achieved with
consent to follow, meaning lenders
can make a conditional offer when
consent from the first charge lender is
the only thing outstanding.
Greater efficiencies across the
second charge mortgage market mean
approvals can now be secured in
record time, oen in a maer of days.
For example, Norton Broker
Services recently completed a £60,000
deal with Pepper, in which a case
was sent to the bank on a Friday aer
receiving the outstanding documents.
A binding offer was issued that same
day, with the case completing the
following Monday at 11am.
In another case, this time with
Norton Home Loans, the application
was packaged and sent to the lender
on 7th January, with the binding offer
received less than 24 hours later.
EDDIE LAU
is broker account manager at
Norton Broker Services
Greater efficiencies
across the second charge
mortgage market mean
approvals can now be
secured in record time,
often a matter of days”
In both cases no valuation was
required, helping to streamline the
process and allowing the borrower to
access funds quickly.
A £25,000 home improvements
application to Interbridge was
submied, with the binding offer
issued later the same day.
The speed of execution and
expertise of those involved in the
case enabled this particular deal to be
completed with absolute certainty and
minimal friction.
While some cases may take a lile
longer, securing a second charge
mortgage in a maer of days is now
commonplace in today’s market.
As a result, for borrowers looking
for a fast and flexible option to raise
funds, a second charge mortgage may
be worth considering to help them get
the funding they need within a short
timeframe. ●
