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2021 was a positive year for second charge

James Rainbird

January 10, 2022

James Rainbird is managing director of Pink Pig Loans

There’s no doubting that 2021 was a very positive year for the second-charge market and, from our perspective as a specialist packager in this market, it was not just busy at certain points but effectively all the way through the year.

Indeed, the year ended on a high. Q4 was our busiest three-month period in 2021 – in fact, in 16 years of trading we’d never had a quarter like it.

There were a number of fundamental reasons for this, not least the restructuring of our business, but also market-wide themes such as lender appetite and innovation, the stamp duty holiday and the demand it drove, but also pandemic-based need from borrowers for both debt consolidation and home improvement finance.

It all added up to a second-charge year like few others, but as I’m sure all mortgage market practitioners will know, you can’t spend too long looking back at what has been.

We have to look forward and, I’m glad to say, there are many positives to focus on which should ensure 2022 is another year of forward momentum and success for the second-charge market.

To my mind, chief amongst these, is the growing confidence there appears to be in the UK housing market as a whole, and this is aiding both lenders and their funders in terms of what they can offer product and criteria-wise for seconds borrowers.

This can be illustrated by a recent shift around borrowing amounts and LTV levels. A few years ago, we had the likes of Prestige Finance offering larger borrowing amounts to second-charge clients – £250,000 to 85% LTV and £100,000 to 90% LTV, but until recently those products were few and far between.

However, we’ve just started working with a new lender, Step One Finance, which can provide second-charge mortgages of £500,000 up to 90% LTV, and such products clearly open up the market particularly for higher net-worth clients looking for larger second-charge loans which might be unavailable elsewhere.

As an example, we’ve been working with such a client who recently purchase a £1.3m property but required £300k in order to carry out the work they wanted to do on the property.

Previously, that client would have been capped at £100,000 in terms of what they could borrow on a second-charge, but this new offering means that’s no longer the case.

These types of deal and products are only possible because both lenders and funders have confidence in the housing market as a whole, have confidence in what house prices are doing (and are likely to do), and of course, have confidence in their ability to manage the risk in these loan.

From our perspective, it also seems to help a lot that we can package a case efficiently and professionally, and nothing is being left to chance in terms of how we submit the case and work with the lender concerned.

That also provides a greater confidence in terms of what they are taking on, and for the client, it ensures they are getting the right advice and they have access to products which – let’s be frank – not all advisers/packagers, and therefore clients, are going to have.

In a marketplace where there can be a uniformity in terms of the product offerings available, it will be those who can find these types of niches and stand out from the crowd, who are likely to do well.

And for all advisers, having access to these products via packagers like ourselves, will be crucial in supporting a wider range of clients and ensuring the momentum generated in 2021 continues well into the future.


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