Over two million homeowners are planning to improve their properties this year rather than move house; however, 15% don’t know how much they’ll need to spend and a further 14% aren’t sure how they’ll pull together the money needed to fund renovation plans according to new research from specialist lender, Together.
The findings come ahead of the launch of Together’s new report, Opportunities in Challenging Times.
Meanwhile, latest industry figures highlight the increasing popularity of second charge mortgages to fund renovation plans or help with existing debt consolidation, with a 2.9% month-on-month increase to £104.5million in January this year. Indeed, Together’s own internal data shows that the number of customers opting for second charge mortgages to fund renovation costs jumped by 10% between 2018 and 2022.
And yet, while the popularity of this type of finance is growing, there is still a significant cohort 43% who are completely unaware that they could release equity in their homes by taking a second charge mortgage – also known as a secured loan – to fund renovation costs or assist with debt.
These mortgages also mean borrowers avoid penalties such as Early Repayment Charges (ERCs) which may apply if remortgaging out of an existing fixed rate arrangement early.
Together’s research also found a further 19% of homeowners are open to second charge mortgages this year to help with existing debt and loan consolidation.
James Briggs, head of personal finance intermediary sales at Together, said: “A second charge mortgage can offer a cost-effective route for homeowners needing to raise money for home improvement plans, when compared to remortgaging.
“This gives homeowners the option to release the equity in their property that they need for improvements, while keeping what may be a favourable, existing mortgage rate. However, as second-charge mortgages are not widely available through high street lenders. It’s critical that people discuss their circumstances with a professional mortgage broker to understand how they can work as a viable option – be it for renovation plans or to help with debt consolidation this year.”
