As investors reviewing the property-backed lending landscape, you may already have noticed the rising prominence for second-charge bridging finance, particularly as we move into 2026. At Somo, we see this shift first-hand. Simon Cottrell, our Director of Investor Relations and Recoveries, shares his perspective on the common misconceptions around second-charge loans - and why the latest numbers suggest they’re becoming an increasingly important part of the market.
What is second charge lending?
A second-charge bridging loan is secured against a property that already has a first mortgage in place, with the first lender retaining priority of repayment if the property is sold. Rather than disturbing their existing mortgage, borrowers can unlock equity through a second charge to fund short-term business purposes - from seizing a time-sensitive investment opportunity to supporting cash flow. For investors, the growing use of second-charge bridging highlights a segment of property finance that is becoming increasingly central to how businesses access fast, flexible capital.
Busting the Myths
“Second-charge loans are too risky to consider.”
That’s one of the most common assumptions we hear. In reality, these loans are still secured against real estate, with conservative loan-to-value limits and rigorous underwriting. The industry has also benefited from advances in digital infrastructure and enhanced due diligence, both of which are driving improvements in quality and efficiency.
“They’re only used as a last-resort option.”
Again, the truth is quite different. Borrowers are increasingly using second-charge loans as a strategic tool. They enable access to liquidity without disturbing attractive first-mortgage rates or triggering costly early repayment charges. In many cases, they provide borrowers with the breathing room to act quickly, without compromising their long-term financing.
“Second-charge lending is niche and shrinking.”
The numbers tell another story. According to the Finance & Leasing Association (FLA), the sector recorded consistent double-digit growth throughout 2024 — the fastest annual expansion since 2009 — and volumes in the first half of 2025 were 12% higher than the same period the year before. Far from niche, second-charge is now a mainstream component of the bridging finance toolkit.
Momentum Building
This growth is not a blip. From January 2025 onwards, second-charge mortgage business volumes posted robust monthly increases, with January alone seeing a 24% rise year-on-year. According to the Finance & Leasing Association (FLA), by the second quarter the broader bridging sector - in which second-charge lending plays a dominant role - showed strong resilience. Loan applications were up 11% compared to the previous year, and notably, 90% of that activity was linked to second-charge loans.
Looking ahead, broker sentiment remains upbeat. A recent industry survey found that nearly three-quarters of brokers expect the bridging market to expand in 2025, with one in ten predicting high growth. This optimism is reflected in the broader loan book: completions hit a record £2.3 bn in Q4 2024, and the total is forecast to exceed £10 bn in 2025, with some analysts suggesting it could reach £12.2 bn before the year is out.
The Wider Context
These trends sit against a very particular backdrop. Many homeowners remain locked into low fixed-rate first mortgages secured before the recent interest rate rises. That has dampened remortgage activity, but it has also opened a space where second-charge lending has stepped in to provide a flexible alternative. As Mortgage Professional America (MPA) reports, the bridging loan market is seeing lower rates and steady demand in 2025, reinforcing the shift toward second-charge products, and it's no different here in the UK.
At the same time, macroeconomic pressures have not dented demand. Mortgage approvals in mid-2025 reached their highest point in six months, showing that even in a higher-for-longer rate environment, appetite for funding solutions remains strong. While UK house price growth has slowed, the market has broadly stabilised, and forecasts suggest a modest recovery in remortgage activity in 2025 and into 2026. According to the Financial Times, bridging, and especially second-charge bridging, is following this trajectory.
Why This Matters for Investors
For investors watching the market, there are three key takeaways. First, second-charge lending represents a diversification of funding streams within property finance — a sign of a sector maturing beyond reliance on traditional mortgages. Second, the growth we’re seeing demonstrates structural resilience, with momentum sustained even during economic uncertainty. And third, the ability of second-charge loans to adapt strategically to borrowers’ needs — preserving first-charge terms while releasing liquidity — underlines why brokers and their clients are turning to them in ever greater numbers.
A Final Word
Second-charge bridging is no longer a marginal product; it is becoming a structural fixture in the UK’s property finance landscape. Its momentum is underpinned by robust growth figures, increasingly seamless execution, and clear market demand. For investors, the key isn’t to view second-charge lending as a curiosity, but to understand it as a barometer of how the sector as a whole is evolving.
At Somo, we’ve created our own Mythbuster to cut through the noise — an insider’s guide to the realities of second-charge lending. For those interested in understanding the market from the inside out, sign into your account and read our useful 8-point Guide in the Library. If you're not yet a registered to invest with us, get started here:
If you'd like to know more about our second charge loan opportunities, get in touch with our Director of Investor Relations, Simon Cottrell.
Key Takeaways
- Strong growth – second-charge bridging posted double-digit expansion in 2024–25 and momentum continues into 2026.
- Myths debunked – not too risky, not just “last resort,” and no longer niche.
- Secured & strategic – backed by property with conservative LTVs, used to preserve first-mortgage terms while unlocking equity.
- Investor opportunity – offers diversification, resilience, and rising demand in UK property finance.
- Market outlook – brokers predict further growth as remortgage activity stays muted and borrowers seek flexible alternatives.
Categories: Investor News
