The year of the second charge – Defries

Across the intermediary market, client behaviour is shifting.

Following the volatility after Covid and the sharp interest rate cycle, borrowers are regaining confidence. Rather than entering a still-competitive purchase market, many homeowners are choosing to invest in the properties they already own.

For brokers, the ‘move versus improve’ conversation presents a clear opportunity. Clients are weighing stamp duty, legal fees and the cost of refinancing their entire mortgage at today’s rates. For those who secured historically low first charge deals, a full remortgage rarely represents best advice. Disturbing a sub-2% primary mortgage to raise capital simply does not make financial sense.

This is where second charge lending is demonstrating real strategic value.

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Why second charge is becoming attractive

Demand for capital is rising – but borrowers remain rate-sensitive and product-aware. A second charge allows clients to access equity while preserving their existing first charge arrangement. It provides targeted borrowing without restructuring an entire debt profile, making it an increasingly logical solution for home improvements, structural renovations and wider financial planning.

The data reinforces the momentum. According to the Finance & Leasing Association (FLA), second charge mortgage new business reached approximately £2.045bn in the year to October 2025 – a 23% increase year-on-year – with over 40,000 new agreements, up 15%. November figures showed continued growth, with lending rising to around £2.089bn over 12 months, again up 23% annually.

Activity levels are now the strongest seen since 2008.

At The Loan Partnership, we are seeing this reflected in adviser behaviour. Second charge solutions are being introduced earlier in the advice process rather than as a fallback. The product has evolved from a reactive option to a proactive planning tool.

Market dynamics are also strengthening. Greater competition, improved underwriting models and enhanced technology are driving faster turnaround times and more flexible criteria, particularly for complex income and debt consolidation cases.

Mainstream participation is further validating the sector. The entrance of Admiral Mortgages into the mainstream lending market has added visibility and competitive tension.

When established brands commit to the space, it signals long-term confidence and reinforces second charge lending as a core intermediary solution.

For financial professionals, the opportunity is clear. Clients who might previously have opted for unsecured borrowing or wholesale refinancing now have a targeted, cost-effective alternative that protects their primary mortgage rate and supports affordability.

As capital demand continues to grow – driven by home improvements, energy efficiency upgrades and broader financial restructuring – the second charge market is benefiting from both structural and cyclical tailwinds.

While headlines may focus elsewhere, within specialist finance, the message is clear: 2026 is the year of the second charge.