Specialist lender, Together, has reported a rise in second charge loans as homeowners make house improvements for 2022.

The latest figures reported to the Second Charge Loan Index, compiled by specialist broker Loans Warehouse, showed that second charge lending totalled £137m in November, the highest monthly tally since 2009.

The figure also took the total second charge lending passed the £1bn mark for 2021.

Together distribution director, Scott Clay, said that the lender’s own figures mirrored this trend, with an increase of nearly a quarter (24.6%) on its second charge lending between September and October.

“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,” Clay said.

“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.”

Loans Warehouse managing director, Matt Tristram, added that 85% of the second charge loans taken out in November this year were for home improvements and debt consolidation.

“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,” Tristram said.

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

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