The Intermediary – October 2025 - Flipbook - Page 77
S E C O N D C H A RG E
Opinion
Secured loans
and the value of
thinking ahead
H
aving spent more
than two decades in
specialist lending
before becoming a
mortgage adviser,
I have seen the
industry from both sides. One thing
that has become increasingly clear to
me is that the relationship between
adviser and client is paramount.
Good advice is not just about
meeting the need in front of you; it
is about understanding the client’s
circumstances and their medium to
long-term goals.
If advisers focus only on the shortterm, there is a risk that opportunities
will be missed and clients may end
up with products that do not serve
them well in the future. Looking at
the bigger picture allows advisers to
recommend solutions that align with
where clients want to be in two, five or
even 10 years’ time.
A common example is the firsttime buyer who, soon aer moving
in, decides to carry out home
improvements. If they do not have
access to secured borrowing, they may
turn to unsecured credit such as cards
or personal loans, which can be costly
and less sustainable. Unless their
adviser has considered this need at the
outset, the client may go elsewhere
for finance – oen through online
channels – and that can weaken the
relationship.
Secured loans, or second charge
mortgages, can help to avoid this.
They provide a way for clients to raise
funds without disturbing their main
mortgage, and they keep the adviser
at the centre of the process. What is
important is that advisers raise the
possibility of such products early
and remain part of the conversation
as clients’ circumstances evolve.
The market for second charges has
returned to the levels seen before the
financial crash in 2008, and demand
is steady. Clients do not oen request
them by name, but many want to
release funds ahead of a remortgage.
In some cases, high loan-to-income
(LTI) ratios or limited time in their
mortgage make a further advance
difficult. In others, early repayment
charges mean a remortgage is
not suitable. A second charge can
address these challenges in a way
that preserves the client’s existing
arrangement.
LIAM SCHEWITZ
is director at Lima Money
If [borrowers] do not
have access to secured
borrowing, they may turn
to unsecured credit such
as cards or personal loans,
which can be costly and
less sustainable”
Advisers are key to getting clients on the right path
Geing advice right at the
start is key. If a client’s long-term
goals include raising funds for
improvements, consolidating debts
or investing in other opportunities,
the initial mortgage recommendation
should reflect that. If not, advisers
may later find themselves constrained
by lenders who do not consent to
second charges.
There are also clear moments in the
client lifecycle when secured loans
should come into consideration.
Product transfers are one example.
When clients are up for renewal, their
circumstances may have shied –
perhaps a change of career, or income
that has not kept pace with outgoings.
If at that point they express a need
to consolidate, a second charge can
provide a straightforward route.
Advisers already have the information
in front of them; it is simply a case
of recognising the opportunity. Once
advisers start to identify and act
on these opportunities, confidence
builds quickly.
Secured loans are not limited
to home improvements and
consolidation – they can support a
wide range of needs, from funding
a business to enabling a property
transaction. The more familiar
advisers become with these products,
the more natural it is to position them
as part of the conversation.
Ultimately, the role of the adviser
is not just to recommend a product
for today, but to help clients plan
for tomorrow. By taking the time
to understand long-term goals
and being open to a wider range of
solutions, advisers can strengthen
their relationships and ensure clients
achieve the outcomes that maer most
to them. ●
October 2025 | The Intermediary
75
