More homeowners use second charges to improve homes



Second-charge lending totalled £137million in November, the highest since 2009, as homeowners look to add value to their properties.

This means the amount spent on second charges has surpassed the £1bn mark in 2021.

Scott Clay, distribution director at Together, said: Mortgage rates have remained at historic lows so, while many people want to release cash from their home for improvement projects, they wouldn’t necessarily want to remortgage, as they’d potentially lose that favourable rate plus, they may possibly have to pay hefty early repayment charges.

“This wouldn’t make sense if they just need say £10,000 or £20,000 for home improvements and to consolidate unsecured debt at what may be a lot lower rate of interest.

“Instead, it looks like many people are deciding to take out a second charge secured against their home to do the work and pay back the second charge payments alongside their monthly mortgage payments.”

Together has seen an increase in second charge lending between September and October of nearly 25%.

Some 85% of second charge loans taken out in November were for home improvements and debt consolidation, according to Matt Tristram, managing director at Loans Warehouse.

He said: “The Covid pandemic and successive lockdowns seems to have given people the impetus to carry out home improvements on their properties, as well as paying off unsecured debt.

“Previously, second charge borrowing was seen as expensive but we’re now seeing record low rates so it’s an increasingly viable option.”

Second charge rates typically start at just below 4%.

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