The Intermediary – October 2025 - Flipbook - Page 79
S E C O N D C H A RG E
Opinion
Mortgage advisers
should look again
at second charges
A
s a specialist finance
broker I spend a
great deal of time
talking to mortgage
advisers about when
a secured loan – more
commonly called a second charge
mortgage – might be the right option
for their client. These products are
not always well understood, yet they
can be a valuable tool in the adviser’s
kit when remortgaging or a further
advance is not possible or practical.
A second charge mortgage simply
sits behind the first charge lender.
For example, if a client already has a
mortgage in place but needs to raise
additional funds, and their lender will
not agree, or the cost of remortgaging
is prohibitive because of early
repayment charges, a second charge
can provide the solution.
Clients look to raise money for
many different reasons – home
improvements, consolidating debts,
paying a tax bill or covering school
fees. A second charge allows them
to do that without disturbing their
existing mortgage.
There are even products available
that allow a simultaneous second
charge on completion. Many
homeowners want to make changes
to their property as soon as they move
in, such as fiing a new kitchen or
bathroom. Rather than taking out
unsecured borrowing, they have the
option of arranging a secured loan at
the same time as completion.
Not every case is straightforward,
of course. If a client has had mortgage
arrears, their first charge lender may
not be willing to give consent for
additional borrowing. In these cases,
some second charge lenders will accept
an equitable or unilateral charge,
which allows the loan to proceed
without that consent.
One of the strengths of the second
charge market is its flexibility. Fixed
rates can be tailored over two, three,
four or five years to run alongside the
client’s first charge arrangement.
Rates are lower now than they were
in the aermath of September 2022,
though they will always depend on
individual circumstances. In terms of
affordability, there are products that
will allow borrowing at up to 6.5-times
gross income, which is oen higher
than what is available in the first
charge market. The ability to make
overpayments adds further flexibility.
It is worth emphasising that clients
rarely set out wanting a second charge
mortgage. What usually happens
is that they have a borrowing need
that their first charge lender cannot
meet. That is where the adviser plays
such an important role. Having the
knowledge, and the right specialist
partner, means advisers can consider
every option and ensure the client
reaches the right outcome.
SARAH STROUD
is director at Truffle
Specialist Finance
At Truffle, we see ourselves as an
extension of the adviser’s team. We
work closely with brokers, guiding
them through how second charges
work, what to look out for, and what
products are available. We are here
to share knowledge, to give advisers
confidence, and to help them keep
hold of their clients.
In many cases, the service provided
on a second charge can also generate
referrals, strengthening the adviser’s
business in the long run.
Ultimately, secured loans exist
to deliver the right outcome. By
understanding how they work,
advisers can make sure their clients
have every option on the table – and
that is what good advice is all about. ●
October 2025 | The Intermediary
77
