More education is seen as the most important factor in order for the second charge mortgage market to grow.

In a recently conducted poll on Loan Talk, 50% of respondents voted that more education was key for market growth, with new lenders, cheaper rates and the option of a new association each scoring 14%. 

Meanwhile, 8% opted for increased flexibility.

‘The industry needs to take a look at itself’

Martin Stewart, director at London Money, felt the poll was 100% correct.

“…Once again the industry needs to take a look at itself and [ask] why 18 months after MCD [Mortgage Credit Directive] nearly half the broking community is still saying they don’t know enough about second charges.

“I look forward to the day when the fees, commissions and criteria on a second charge mortgage mirror their counterpart in the first charge sector. 

“We are actively seeking a funding line so we can launch such a product, because we know our business model can support it and [are] very confident that [brokers] will engage with it.”

Mark Fry, managing director of CSC Loans, said that although MCD put the second charge industry in the spotlight, there was still a need for more education.

“In my interactions with clients and providers within the industry, it appears that the second charge mortgage option is very much perceived as a product to consider only where a borrower is unable to secure a remortgage.

“For me, the ultimate goal is to get to a situation where a second charge option is discussed as a matter of course in every meeting between a broker and borrower, and as experts in the field, we are fully prepared to help anyone with any questions, queries or concerns regarding the second charge market.”

Gary Bailey, sales director for specialist finance at Together, said that in a recent survey it carried out, 79% of respondents didn’t know what a second charge mortgage was.

“There is still a lot more education needed on second charge so that customers are more aware of what it means and what the benefits could be as an alternative to a remortgage, for example. 

“It takes time, however, to fully implement industry-wide changes and we believe that this is something brokers and lenders can work on together as we move forward.”

‘There are still many misconceptions’

Clever Lending is one such group to have helped support workshops all over the country in the last few years. 

However, Paul Day, sales development director at Clever, said the poll reflected many of its own findings. 

“…We have noticed there are still many misconceptions regarding second charge lending. 

“While we continue our own support for intermediaries in our commitment to education, we often hear comments from advisers that they had a case last month or so that they couldn’t place, but didn’t think a second would fit.”

“This clearly illustrates the need to bring all forms of lending to the fore so advisers do consider seconds as not only a viable solution but, often, the right solution.”

Rob Derry, managing director at Brunel Mortgages and Loans, added: “More education is key, but it’s not just about the existence of second charges as every broker knows that they are there. 

“It needs to be education around their uses, their flexibility and in what circumstances they are more appropriate than a first.”

Listening to mortgage brokers

Scott Thorpe, director at Access 4 Finance, pointed out that with regards to first charges, people are used to being able to have a mortgage in one name, even if they are married, whereas most second charge lenders want the product to be in joint names. 

He also added that whereas a first charge lender will allow day one employment, most second charge lenders would not allow it. 

“The most important way the market will grow is [by] listening to the mortgage brokers and asking them the questions, which a lot of master brokers do not seem to get. 

“It’s now a first charge world product as well, so they need to shape it [accordingly].

“The lenders need to stop listening to the so-called top five master brokers/packagers and listen to the mortgage broker, who should be driving the train and tooting their own horn.”

‘A big bank coming out offering seconds will also make people stand up’

Some 14% believed new lenders could grow the second charge market and Andy Pelley, director at the Loan Partnership, felt that there were plenty of lenders in the market, but wasn’t opposed to new entrants.

“If any new lenders do come to market, it would be good to see them bring something different, as opposed to just taking market share from an established lender.”

Scott added: “Lender competition is good as [long] as it is niche, also a big bank coming out offering seconds will also make people stand up and take notice. 

“Most lenders have some funding lines from banks anyway, so it would be no big surprise for a big bank to come into the market over the next 12 months.”