This has seen distributors provide direct to lender propositions that enable brokers to submit cases in the same way they do for first charges.
However, this has not been the case for all the broker community, with many advisers looking to master brokers for support, either due to a lack of confidence or knowledge around these products.
This support is not just limited to brokers, but also extends to customers.
Most master brokers offer a packaging service for brokers who want to give advice to their clients, but for those that don’t, brokers can refer their clients to the master broker who will give advice and deal with the customer directly, on their behalf.
Some brokers have been reluctant to use a master broker due to the perceived high fees that they typically charge, but this needn’t be the case anymore.
A number of master brokers have recognised this problem and brought their fee structures more in line with the pricing of first charge products. Of course, those brokers who give advice and submit cases directly to lenders are in control of the fees that a borrower is charged.
Last year saw an increase in the number of lenders providing product transfer facilities for brokers, but only a few of them offer a further advance facility via brokers.
While some customers would be happy to deal directly with a lender, many would prefer their broker to both advise and organise their additional borrowing.
As an industry, we need to raise awareness of the opportunities that the second charge market has for borrowers.
Second charges offer great opportunities for the right customer, in particular for those second steppers who are looking to improve not move by renovating their current property to suit their needs and add value as a result.
Although it is unlikely that customers will come and specifically ask for a second charge loan, it is our duty as an industry to make them aware of all of the options available to them and point them in the right direction for their situation.
The future for second charges
There have already been a number of significant improvements to the second charge market, which have not only allowed brokers to make more informed choices, but also to provide better and more holistic advice to their customers.
Recent figures from the Finance and Leasing Association (FLA) show that the second charge market reported new business up by value and by volume compared to 2016.
However, it is clear there is still more that can be done before brokers feel as comfortable advising as they do on their first charge counterparts. More education is needed among the broker community to provide better customer outcomes and to bring second charge loans fully into the mainstream.