Together sees second charge loan spike amid industry-wide growth

  • 14/12/2021
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Together sees second charge loan spike amid industry-wide growth
Specialist lender, Together, has seen its second charge lending grow by nearly a quarter between September and October, mirroring a wider trend in the industry as second charge lending surpasses £1bn.


The lender said that the increase was driven by homeowners making home improvements.

Commentators suggest figures released in full tomorrow, will show second-charge lending approaching £140m in November. This is the highest since 2009.

Second charge lending has also now surpassed the £1bn lending mark for 2021, which was hinted at in its report for October. 

Scott Clay, distribution director for 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.”

Matt Tristram (pictured) managing director at Loans Warehouse, added that 85 per cent of second charge loans in November were for home improvements and debt consolidation.

In its October report, consolidation loans made up around 46 per cent of loans offered, followed by consolidation and home improvements at around 30 per cent and home improvements at around 19 per cent.

Tristram added: “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.”

Interest rates for second charge loans tend to be higher than for traditional mortgages, as they pose a greater risk for the lender. However, rates are currently at an all-time low with some deals available at below four per cent, meaning they’re becoming increasingly popular.

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