SoMo second charge business rises 25 per cent in 2021 as London office plans unveiled

The lender said that it now made up 50 per cent of its loans, continuing a trend since the company was launched in 2014.

According to the Finance and Leasing Association, the second charge mortgage market reported the highest monthly level of new business volumes for two years and has now returned to pre-pandemic levels of new business by both value and volume.

The company reported that its second charge lending had “remained consistent” through the pandemic.

Rob Johnson, head of underwriting at SoMo, said: “At the back end of 2020 we were one of the few lenders to keep our doors open for new business. This enabled us to grow our pipeline, hence the record number of completions and lending over the last year.”

He added that second charge lending was a “niche market” with a lot of potential in London and South East.

Johnson continued: “We want to educate brokers about the potential of second charge lending. The message coming from our network is that they’re surprised by the demand and delighted that this type of loan can be used for a variety of purposes.”

He explained that post-pandemic, many businesses were looking to raise funds via second charge mortgages to “keep their businesses afloat, and to jump on new opportunities that have arisen”.

Examples cited include purchasing a buy-to-let property, paying off a tax bill or expanding a business with new premises, materials, or marketing.

“As a business overall, we’re lending more month-on-month and year-on-year and we see second charge loans as an important part of our growth strategy,” he said.

“A lot of lenders won’t look at second charge lending, but we’re very good at it and have robust systems in place to minimise risk. It makes sense to concentrate on this to help support our growth.”

For second charge business the lender can offer up to 70 per cent loan to value (LTV) against open market value, and rates from 0.6 per cent per calendar month.

SoMo added that this year it would open an office in London so it could work with business development managers and underwriters to take advantage of the second charge market.