The UK second charge mortgage market reached £2.14 billion in new lending during 2025, with more than 41,700 agreements completed, according to data from the Finance & Leasing Association. The figures represent a 24 percent year-on-year increase and mark another period of sustained double-digit growth for the sector.
Why landlords are choosing second charges
For buy-to-let landlords holding mortgages secured at historically low rates during the ultra-low interest period, remortgaging to raise additional capital has become increasingly unattractive. Second charge mortgages allow property investors to release equity for portfolio expansion or property improvements without disturbing their primary mortgage terms.
This structural dynamic has underpinned consistent annual growth since 2021 and continues to support strong demand as landlords seek efficient ways to access capital while protecting favourable first charge rates.
Average loan sizes rise for third consecutive year
Average loan sizes across the market have increased for the third consecutive year, rising from £45,341 in 2023 to £51,198 in 2025, according to FLA data. The consistent upward trend reflects growing borrower confidence and a shift towards more strategic capital raising, often for debt consolidation, property improvements and portfolio expansion.
Market pricing has also become increasingly competitive, with rates below 5.5 percent and 100 percent loan-to-value products now available from multiple lenders. The broader availability of competitive pricing has further supported the sector’s expansion.
Ryan McGrath, director of second charge mortgages at Pepper Money, said the FLA’s latest data confirms the sector’s rapid expansion. “The market has now delivered multiple consecutive years of double-digit growth, reflecting a structural shift in how homeowners access equity,” he said.
McGrath added that demand for second charge mortgages as a mainstream solution will continue to grow throughout 2026 as inflation eases and base rates stabilise. “These products are no longer a niche offering; they’re an essential part of how UK homeowners manage equity and financial flexibility,” he said.
How second charges work for property investors
A second charge mortgage sits behind the primary mortgage and uses the property as security. For landlords, this provides a way to raise funds for renovations, deposit accumulation for additional properties, or consolidating higher-interest debts – all without triggering remortgage fees or losing a competitive first charge rate.
The speed of decision-making and transparent criteria have made second charge products increasingly attractive to brokers advising property investors. With completion times typically faster than full remortgages, landlords can act quickly on investment opportunities or compliance upgrades.
Pepper Money has reinforced its position as the UK’s leading second charge lender, continuing to support brokers and customers within this rapidly expanding segment of specialist lending.
Editor’s view
Second charges have quietly become a core tool for landlords managing portfolios in a higher-rate environment. The 24 percent growth isn’t a blip – it reflects a permanent shift in how investors think about equity. For those sitting on low fixed rates from 2021-22, disturbing that first charge to raise capital makes little sense when alternatives exist.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 26 February 2026
Sources: Finance & Leasing Association, Pepper Money
Related reading: Landlords extract record equity as confidence returns to the buy-to-let market
