Searches for second charge mortgages rise 14 per cent annually – Knowledge Bank

Data from Knowledge Bank that have been collected for a dual-branded Pepper Money Specialist Lending Study showed the range of questions asked by brokers relating to second charge cases had broadened. 

The analysis of behaviour and trends on the Knowledge Bank platform showed there was a rise in individual criteria searches with 77 more occurring. 

The top search terms for second charge mortgages were debt consolidation, debt management plans, defaults over £300 or registered in the last three years and credit repair. 

This corresponded with searches for mainstream residential mortgages, where the top five searches were missed or late payments, defaults registered in the last three years, defaults registered more than three years ago, capital raising for debt consolidation and defaults over £500. 

Rising interest in second charge mortgages

Nicola Firth, founder and CEO of Knowledge Bank, said: “It was interesting to see that the top causes of adverse credit in the Pepper Specialist Lending Study mirrored exactly what we’ve seen brokers searching for on Knowledge Bank when trying to help their clients. “Missed or late payments” dominated searches. 

“Second charge mortgages have been a talking point throughout the year. They provide a means for clients to reset their finances and get back in control. It is a route that requires specialist training to complete, but one that offers a more holistic approach to the advice journey for clients. You can see from the top five searches why second charges are such a hot topic, and the advice around these is key.” 

Ryan McGrath (pictured), second charge sales director at Pepper Money, added: “According to our Specialist Lending Study, the most popular use for a second charge mortgage amongst those customers surveyed is for home improvements. Only one in four people (27 per cent) would consider using a second to consolidate debts if it reduced their monthly credit bill. This is probably indicative of the general lack of customer awareness of seconds, as the top Knowledge Bank search term for the product last year was debt consolidation. Plus, the majority of our completions are for debt consolidation. 

“With the ongoing cost-of-living crisis continuing to put a squeeze on household finances and more people turning to credit to cover day-to-day costs, brokers have an opportunity to improve awareness of seconds and help customers get their debts under control and reduce their outgoings through debt consolidation. Simplifying multiple debts into a single repayment not only makes things simpler but can also dramatically reduce the cost of repaying that debt. It may not be right for everyone, but we think brokers will see even higher demand for second charge mortgages for debt consolidation in 2024 than they did in 2023.” 

From research last year, Knowledge Bank found that the financial landscape continued to challenge lenders and borrowers.