Homeowners are utilising second charge mortgages to raise money to invest in buy-to-let (BTL) properties, home improvements and also consolidate debt, according to new findings from Knowledge Bank.

The criteria search specialist revealed that capital raising featured in three of the top five most searched terms in the second charge market during March.

However, Knowledge bank suggested the reasons for this capital raising “varied greatly”. The second highest searched term was ‘capital raising to purchase a buy-to-let’, which followed the trend of investors looking to purchase rental properties as the stock market remains volatile and demand for rental property soars.

‘Capital raising for home improvements’ was fourth on the most searched terms’ list. The criteria search expert suggested this is potentially due to homeowners looking to renovate, add an extension, or build an office in the garden, possibly as a result of an extended period working from home.

Furthermore, brokers were also searching for ‘capital raising for debt consolidation’, which landed at number five on the most searched for terms. Knowledge Bank highlighted that this could suggest there are clients looking to secure unsecured debts against their home to bring all their debts into one place and take advantage of the lower interest rate they will pay.

Knowledge Bank operations director, Matthew Corker, suggested the second charge market “clearly demonstrates the current economic divide in the UK at the moment”.

“There are those who have increased their savings through lockdown and are now using a larger deposit to either invest in property, or add to their existing home,” Corker commented. “But there are also those who have been hit hard, either losing their job or being put on furlough.

“With extensions to the stamp duty holiday and job support scheme announced by the Chancellor during the latest Budget, lenders are continuing to adapt criteria to keep up with the evolving market.

“With criteria changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

Share Story: