Home improvements were the most popular reason to take out a second charge loan in 2018 research has found.
Almost half (48%) of customers used some of the funds unlocked from their property towards enhancing homes and gardens.
These figures demonstrate the flexibility of a second charge as a tool for financial planning in retirement, both as a means to unlock wealth in the immediate term and with a view to the future. It is significant how many people are untapping the value of their property to fix-up their home or increase their comfort and security as they grow older.
This significance is even clearer when seen in the context of the latest data, which shows the amount spent by 50-74-year-olds on alterations to their house is at its highest level since at least 2010.
Taking out a second charge to fund home and garden improvements benefits more than just the current occupiers. Such enhancements can add value to the property and help pass on wealth to future generations.
There’s a slight rise in the number of customers who used a second charge loan for home improvements in Q4 2018 (47%) compared with the same quarter in 2017 (46%). Although these figures did not reach the high of Q3 2018 (50%), home improvements continue to be the most popular use for second charge lending.
Elsewhere, more than one in four people used a second charge to manage unsecured debts in 2018 (26%). Last year’s final quarter figure for unsecured debt was also the same as 2018 as a whole, rising slightly from 25% in Q3 2018.
Other popular uses for second charge loans among UK households in 2018 was holidays (22%), day-to-day living (21%) and gifting to family (16%).
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