The Intermediary – October 2025 - Flipbook - Page 78
S E C O N D C H A RG E
Opinion
Another cracking
month for
second charge
T
he second charge
market is definitely
on a roll! Data from
the Finance & Leasing
Association (FLA)
revealed that the
value of new second charge mortgage
business rose by 22% to £177m. The
FLA said both the value and volume of
new business conducted in June were
at their highest levels in 2025.
The FLA also reported that the
most popular purpose for using a
second charge mortgage was for the
consolidation of existing loans at
57.6%. Well, no surprise there. The
fact is that second charge mortgages
have always been an excellent way to
consolidate other borrowing into a
more manageable repayment without
upseing existing primary mortgages.
Even though second charge
mortgages are becoming more
popular, a remortgage is still more
likely to be recommended by advisers
to clients seeking to raise capital, even
though there are many reasons why a
second charge might be beer advice.
Yes, second charge loans are more
expensive. Rates can indeed be greater
than those charged for a remortgage,
but against that, clients for the second
charge option do not face potential
charges from their first charge lender
in respect of early repayment, which
can be excessive.
Not only that, but a client’s credit
profile might not be as good as it was
when they took out their original
mortgage, which throws the question
of affordability into the mix again.
Clients can end up with monthly costs
considerably greater than they were
used to, because the new remortgage
could be much more expensive aer a
new credit check.
When you add in the likelihood
of early redemption penalties for
76
The Intermediary | October 2025
LAURA THOMAS
is regional sales manager
at Equifinance
Even though second
charge mortgages are
becoming more popular,
a remortgage is still more
likely to be recommended
by advisers to clients
seeking to raise capital”
stopping the original mortgage early,
a second charge mortgage becomes a
more palatable solution.
It’s simpler, it isn’t tied to the
original mortgage term and it should
therefore be considered a more logical
capital raising solution.
Awestruck over tech?
Automation, technology and fintech
are all buzzwords that float around the
lending market.
For many brokers working at the
customer coalface, the way lenders
describe themselves and their service
is only relevant if their cases make
it from enquiry to completion in the
shortest possible time.
One accepted definition of fintech
describes ‘new tech that seeks to
improve and automate the delivery
and use of financial services.’ There
are many examples of firms in our
industry that have managed to
successfully incorporate fintech into
their overall propositions, and brokers
have benefied from the service
upgrades that have come out of
that collaboration.
However, it is important to
remember that just puing ‘fintech’
into marketing material does
not mean that the company is
automatically imbued with the tools to
improve its service proposition.
I don’t think there is a set of
standards that businesses have to
meet to use the fintech title. Therefore
anyone with, say, a new (to them)
customer relationship management
(CRM) system can start calling
themselves fintech enabled.
I’d hate to think that some firms
are just hoping that the description
lends a certain tech-savvy gloss to
their business, without actually
doing the hard yards of making a real
financial investment.
Ultimately, the proof lies in
the customer journey. If there is a
significant difference in the service
that brokers receive as aa result of
the tech investment, then I am all
in favour.
What is not so good is where lenders
say they have adopted new technology
but there is no difference in the service
levels. Brokers who are tempted by the
promise of improvements are going to
be disappointed.
Not just skin deep
My contention is that if you cut down
to the bones of what brokers really
want from their lenders, it is not the
promise of tomorrow, it is the delivery
of first-class service today – tech
powered or not.
Brokers need to be able to
see tangible benefits from the
promise behind new technology
enhancements. In short, they just
want to know they can trust the lender
they choose to get the job done. ●
