A large number of mortgage brokers are expecting to place a second charge for the first time during 2022, new research published by Central Trust has indicated.

A webinar poll conducted by the specialist first and second charge lender revealed that 71% of broker respondents who haven’t recommended a second charge mortgage before said they will look to do so this year.

A majority of brokers also raised issues with placing cases with self-employed and contractor clients due COVID related income issues. The findings showed that 61% of respondents said they were having problems placing such cases due to reduced income during the pandemic, despite client incomes having recovered to pre-pandemic levels.

The responses to Central Trust’s study emerged during a session held in conjunction with Knowledge Bank based on the specialist lending marketplace which had over 100 brokers in virtual attendance.

Central Trust director of commercial operations, Maeve Ward, said the findings highlight a need for “education in the marketplace” about second charge mortgages, and how they can be an alternative to a remortgage.

“I’m confident that when brokers fully understand how and when a second charge mortgage might be the right outcome they will look to offer them either directly or via a master broker,” commented Ward. 

“Many self-employed borrowers will be looking to capital raise and a second charge may well be the best solution. However, most lenders operating in the market will fall short of the self-employed borrower’s requirements because they will assess the income from the most recent SA302 – which will relate to the period of the pandemic – and not take into consideration what went on before or how the business might now be operating at pre-pandemic levels.

“Brokers should take the time to become knowledgeable about the second charge market.”

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