Second charge opportunities in the untapped mortgage transfer market

Recent figures from UK Finance highlight an untapped mortgage transfer market for second charge solutions and opportunities for brokers to engage with clients when they’re thinking of transferring their mortgage internally from their current lender.

In the first six months of 2018, 775,600 homeowners switched product with their existing provider – otherwise known as a product transfers. By value, this represents £107.5bn of mortgage debt refinanced internally.

Of the total number of product transfers, 413,500 transfers, worth £60.7bn, were conducted on an advised basis and 362,100 transfers, worth £46.8bn, were execution-only.

What’s interesting is these figures do not feature in any market data on remortgaging, or other published gross mortgage lending data.

The figure of almost £50bn transferred with no advice from a qualified introducer or adviser, opens up a number of huge number of untapped opportunities for the seconds market.

Usually we see financial transactions such as these triggered by a need, often the restructuring of debt, to make home improvements to add value to a customer’s home. But in these cases the whole balance is simply transferred to a new product, without planning for the possibility of raising money for other financial purposes or future needs.

So what is driving so many borrowers to simply swap their product? Maybe it is just rate or the option of going onto another special deal, in which case the borrower could be missing out on taking this as an opportunity to have a look at their wider finance arrangements.

With a second charge, rates also remain low and they can be used for other purposes such as improving the value of the home and rebalancing debt. This would seem a good time for brokers to get involved and check all the options have been considered so decisions made are the right ones for that customer.

Find out more about our second charge products here, or alternatively speak to one of our helpful advisers on 0800 316 2224 for more information.