By Lucy Waters - Managing Director for Aria Finance
Second charge mortgages have long been at the fringes of the mainstream lending market, regarded as useful in certain scenarios, but often overlooked.
However, subtle structural changes in regulation, technology, and broker behaviour are beginning to reposition the humble second charge as a more viable and accessible option for both advisers and their clients.
They are becoming a more credible alternative in scenarios where a remortgage or further advance doesn’t quite fit. With evolving FCA guidance, growing lender participation, and an ecosystem of tech-led platforms making processes smoother than ever, it’s time for brokers to reconsider our attitudes and stop seeing second charge as second best.
Regulation: A shift toward practical suitability
It has been impossible to ignore the FCA’s recent moves to relax parts of the advice and suitability framework reflecting a broader pivot toward more pragmatic, outcomes-focused regulation. Though not necessarily headline-grabbing, these changes could prove particularly important for second charges where suitability often hinges on nuanced affordability or product-specific flexibility.
As the regulatory environment becomes more permissive around how advice is delivered and documented, advisers may find second charge recommendations easier to incorporate into a compliant process particularly when supported by tech tools that evidence suitability and enable efficient referrals.
This regulatory shift doesn’t mean second charges are about to explode in volume. But it could reduce the friction that has historically discouraged many brokers from engaging with them.
Market dynamics: gaps second charges can fill
At the moment, first charge mortgage activity remains relatively muted, especially in remortgaging, as rates remain relatively high and many borrowers are still clinging to ultra-low fixed rates secured during the ultra-low rate era. That said, around 1.8m fixed rate mortgages are set to mature in 2025 which will inevitably drive an increase in remo activity.
Aside from those with maturing deals in 2025, there will of course be borrowers that remain on good fixed rates. It’s entirely reasonable they may be reluctant to give up favourable rates by remortgaging in full, but will still have financial needs and as brokers we need to be able to cater for both eventualities. The need for home improvements, debt consolidation, or other expenses will remain for many. In such cases we all know that a second charge product can serve as a flexible funding line without disturbing the first charge arrangement.
Technology: From friction to fluidity
One of the most significant developments in recent years has been the transformation of the second charge journey through technology. What used to be a fragmented and often manual process has become increasingly digitised and broker friendly.
Second charges are now integrated into mainstream sourcing tools like Twenty7Tec, Iress, and Finova giving brokers visibility during the standard advice process, rather than requiring a separate workflow.
CRM and case-tracking platforms now flag potential suitability, support compliant referrals, and track cases from referral to completion. Packaging journeys have also improved through tools like open banking, digital fact finds, and e-signatures. That reduces the time to offer and enhances the client experience in the process.
Importantly, these advances are making it easier for brokers to participate in second charge lending without dramatically increasing their administration or compliance burden.
A quiet evolution
It would be too bullish to claim that second charge mortgages are on the verge of explosive growth. However, they are being steadily reshaped by a number of subtle forces into a product that fits more naturally into mainstream borrowing needs.
For brokers, this represents an opportunity. Not necessarily to generate massive volumes, but to offer more rounded, flexible solutions for clients whose needs don’t fit neatly into a remortgage box.
Tech is improving and no doubt will continue to do so with the adoption of AI over time. The regulatory space is also evolving and lender participation is diversifying. We have seen new entrants like Admiral offering slick, AVM-led platforms for quicker decisions on homeowner loans and we may end up seeing more in due course.
As these market dynamics continue to evolve, advisers who take the time to understand and integrate second charges into their proposition will be well-placed to reap the rewards.
It’s not quite a revolution but it’s an evolution and a new direction of travel that can’t be ignored.
