Seven out of ten brokers say they plan to recommend a second charge mortgage for the first time this year, according to Central Trust.
The intermediary-only lender says that 71% of advisers say they expect to place a second charge for the first time during 2022, following a webinar poll with over 100 brokers in virtual attendance.
The poll also found that a majority of brokers found difficulties securing loans for self-employed and contractor clients due to Covid-19 related income issues.
It found that 61% of advisers said they were having problems placing such cases after a customer’s income had fallen during the height of the health crisis, but later recovered to pre-pandemic levels.
Central Trust director of commercial operations Maeve Ward says: “These findings highlight the fact there is still a real need for education in the marketplace about second charge mortgages and how and when they can be an alternative to a re-mortgage and a good customer outcome in certain circumstances.
“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.
“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 [tax calculation] – 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. That way, they will be both following the spirit of the mortgage credit directive and be much more likely to help their clients find the best solution for their circumstances.”
The webinar poll was held during a Lender Spotlight session, in conjunction with criteria platform Knowledge Bank, based on the specialist lending marketplace on 16 February.
