79% of people in the UK don’t know what a second charge mortgage is, resulting in homeowners missing out on a potential source of finance, according to a survey from Together.
Of the minority who were aware what a second charge mortgage was, 23% didn’t understand the difference between this and a remortgage.
This is despite the changes in the regulation and promotion of second charge mortgages following the Mortgage Credit Directive (MCD).
Pete Ball (pictured), chief executive of personal finance at Together, said: “For some, a second charge mortgage will be a better option than a remortgage, so it’s surprising that so many consumers are unaware of what they are and how they work.
“Following the changes to the second charge industry as a result of the MCD, brokers are now required to put forward second charge as an alternative option to remortgaging, but there needs to be greater public awareness of what a second charge mortgage means.
“We’ve seen continuing demand for this kind of loan, particularly when it comes to funding home improvements, and this could potentially increase further in light of Brexit. In the research we recently carried out we found that almost a fifth were less likely to move house as a result of the decision to leave the EU, although 35% were planning some home improvement in the coming year, and second charge mortgages are ideal of this purpose.”