Unlocking Opportunities in the UK Second Charge Mortgage Market

The second charge mortgage market has quietly moved from the sidelines to centre stage, becoming one of the most active and opportunity-rich areas of lending right now.

Mainstream mortgage headlines might dominate the press but dig a little deeper and the story in the specialist space is even more encouraging. In the first half of 2025, the Finance & Leasing Association (FLA) reported a 16% jump in new second charge agreements in June compared with the same month of the previous year. Lending volumes hit £177m, the highest monthly figure of the year so far, and the first six months of 2025 ended up 12% ahead of H1 2024.

That’s not just healthy growth; it’s a sign that second charges are now firmly on the radar for both brokers and borrowers. For mortgage professionals willing to develop their skills in this flexible but complex arena, there’s a real opportunity to expand their service offering, and add additional value to clients wanting to raise capital where traditional first charge borrowing isn’t possible or doesn’t provide the best outcome.

Why Is The Market Growing? 

Several key factors are driving the rise in second charge borrowing:

• Interest Rates: The Bank of England’s recent rate cut to 4.0% is the fifth reduction in this cycle, easing affordability pressures, particularly for borrowers on variable-rate products. This makes refinancing through a second charge more attractive in certain scenarios.
• Equity: Halifax reports that UK house prices rose by 0.4% in July 2025, pushing the average property value close to £298,237. For many borrowers, this creates an opportunity to release significant funds, often at higher loan-to-value (LTV) ratios than would typically be available on a first charge, with the added bonus of not disturbing their main mortgage.
• Borrower Use: Around 57–59% of second-charge borrowing is for debt consolidation, 24% for a mix of consolidation and home improvements, and 12–13% for home improvements alone. This reflects a shift from purely reactive borrowing to proactive, goal-driven financial planning, where consolidating multiple debts into a single, manageable payment is often the priority for improving clients’ overall financial health.
• Product and Criteria Innovation: More lenders have broadened their criteria to accommodate a wider range of borrower profiles, including self-employed applicants, those with complex income streams, and clients with previous or current credit issues. Alongside streamlined application processes and faster turnaround times, interest rates on second charge mortgages are now starting not far off mainstream first-charge products. This combination of flexibility, speed, and competitive pricing makes second charges a genuinely attractive and viable alternative to traditional lending routes, even more so than they were just a couple of years ago.

Presenting a Second Charge Mortgage as a Strategic Option: In some scenarios, remortgaging to access capital simply doesn’t make sense, especially if the client would be walking away from a market-beating first charge rate. A well placed second charge lets the borrower retain their existing mortgage deal while unlocking equity in their property to access the funds they need.

That’s why second charges shouldn’t just be framed as a “last resort” option, they’re a strategic tool in a broker’s kit. When introduced at the right time, and with a clear explanation of costs, risks, and benefits, they can be the most cost-effective, least disruptive route to achieving the client’s goal.

Future Outlook

Looking ahead, the second charge mortgage market is set to continue its upward trajectory over the next 12 to 24 months. With lender appetite growing and product innovation accelerating, brokers will find an even broader range of options to meet diverse client needs. Economic factors such as fluctuating interest rates and evolving property values will keep second charges relevant as a flexible funding solution. For brokers, this means now is the time to deepen your expertise and confidently incorporate second charge products into your advisory toolkit, positioning yourself as a trusted specialist in a rapidly expanding market.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.