Homeowners opt for second charge loans for renovations: Together Mortgage Strategy

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One in ten UK homeowners plan to use their finances on home improvements rather than moving, according to Together.  

Households say a key driver behind this move, among 17% of borrowers, is the need for homes that are more energy efficient and cheaper to run, says a report by the specialist lender, which comes against a backdrop of the rising take up of second charge loans.   

It adds that “rising interest rates has dampened appetites for new home purchases this year”, as the Bank of England has hiked interest rates ten times to 4% in little over a year, says the firm’s Opportunities in Challenging Times study.  

Second charge lending last year hit £1.71bn, a 45% increase from 12 months ago, according to the latest industry data from Loans Warehouse.  

The moves come as second charge lending jumped by 56% since 2016, with 90% of this funding valued at £190,000 or greater.  

Households who plan to make home improvements expect to spend £12,200 on average on renovations.   

However, the report points out that many borrowers and not aware of using a second charge loan as a finance option.  

It says that 63% of households plan to use savings to cover renovation costs, 8% plan to take out a personal or unsecured loan, while 5% will remortgage.  

Together head of personal finance intermediary sales James Briggs says: “While the cost-of-living and fears around rising interest rates may threaten and cause some homeowners will property ambitions to pause plans, there is clearly still a healthy appetite for new purchases this year.  

“And, while some may not move into new homes, we are seeing a trend for homeowners planning to spend on home improvements on their current properties.   

“That being said, the reliance on people’s savings and additional loans may cause undue stress when keeping up with existing bills and repayment costs — all of which could hamper plans later down the line.  

“There is a real risk of homeowners overlooking the value of second charge mortgages which can offer a simple route to unlocking further equity to fund these renovation projects without them having to resort to unsecured borrowing via a personal loan.  

“Second charge loans are not widely available through mainstream lenders, and many may not have ever heard of them, so it may be worth potential borrowers speaking to an adviser who has access to specialist mortgage products like these.”  

Together’s research was conducted by data group Opinium between 3 January and 6 January among 2,000 UK adults.


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