Three quarters of brokers don’t talk about second charges
Three quarters of brokers (74%) do not tell their clients that they offer second charge mortgages, according to extensive research carried out by Brightstar Financial.
The specialist distributor undertook a study of a diverse group of more than 1,000 intermediaries, including different types of broker firms, IFAs, directly authorised brokers and appointed representatives.
According to the results of the research, only 26% of brokers said they mentioned second charge mortgages to their clients during conversations to discuss their purchase or remortgage, or at any point during the term of their product. This means that 74% of brokers don’t mention second charge mortgages as an option for their clients at any point during their relationship.
The most common reasons given by advisers for not talking about second charge mortgages were that they did not have the time, or simply that they forgot to do so.
Michelle Westley, head of marketing at Brightstar Financial, says:
“It’s now more than four years since second charge mortgage lending came under the same umbrella of regulation as the first charge market and brokers have been required to consider second charges alongside other options for capital raising. So, it’s astounding that so many brokers are still not having conversations about second charge lending with their clients.
“The good news is that this means three quarters of brokers now have a great opportunity to boost their business levels as we move into next year. It’s widely anticipated that the purchase market will slow down in 2021 with the removal of Help to Buy and the end of the Stamp Duty holiday, but the second charge mortgage market is set for growth as demand increases from customers who want to release capital from their home.
“Now is a great time for brokers who don’t have experience in second charge lending to partner with a specialist in this area so that they can hit the ground running, safe in the knowledge that they can access sector-specific expertise for their clients.”
Danny Waters, CEO at Enra Group, says:
“At a time when borrowing needs are becoming increasingly complex, it is disappointing to see that a significant proportion of advisers are disregarding second mortgages as part of their advice process.
“It is understandable that the challenges presented by current service levels within the first charge market means mortgage intermediaries are likely to be experiencing increased pressure around operational capacity and resource, however the option to outsource second charge advice and processing with specialist broker firms such as Brightstar, mean that second charges can and should still be considered alongside remortgage options to determine the best possible consumer outcome.”