Second charge loans have an important role to play in a functioning housing market and could help the government out when the Help to Buy Scheme comes to an end, Ray Boulger, senior technical manager at John Charcol, has said.

Speaking at the Financial Services Expo in London’s Billingsgate Boulger said second charges could be used as a top up on a mortgage which in many cases would prove much more cost effective for a borrower than high LTV lending.

He said that in some circumstances the cost comparison between an 80% and a 95% LTV mortgage sees the final 15% of the mortgage costing a borrower an additional 15% in real terms.

Boulger said his calculations found that a secured loan on a property would prove much more cost effective with some loans available at 4% – some 11% less than the final 15% of a 95% LTV mortgage.

He said: “First charge lenders should be looking at seconds as a way to top up mortgages which is something that we used to do in the past.

“I’d call on all first charge lenders to look at this.”

There were also calls for intermediaries ensure that they consider all options, including second charges, when dealing with borrowers rather than wait for the regulator to make it a mandatory requirement.

Alan Cleary, managing director of Precise Mortgages, said: “It would be a folly to think that we can wait for the regulator to get involved before we do anything. What we have to do is start to treat seconds the same as firsts.”

And Rob Jupp, chief executive of packager Brightstar Financial, warned the industry cannot fight against regulation and could end up in hot water in the future if it does not consider all the options for borrowers.

He said: “Whether you like it or not regulation is here to stay. We cannot fight against it. But the biggest challenge for those who haven’t looked at the second charge market is the threat of claims management firms.

“If you haven’t offered the right product they [claims management firms] will be all over you. It will be relatively easy with retroactive technology to see if a second charge loan was the right option in the past.

“Every broker should be looking at seconds as an option.”