As rising interest rates discourage new home purchases, 9% of UK homeowners plan to invest in home renovations instead of moving, according to a report by Together, titled Opportunities in Challenging Times.
The research cites the need for energy-efficient, cost-effective homes (17%), and dissatisfaction with current homes after spending time indoors during the festive season (16%) as the primary reasons behind this trend.
Together’s data reveals a significant increase in second charge funding since 2016, rising to 56% from 29% pre-2016, with 90% of all second charge funding valued at £190,000 or higher.
Homeowners planning improvements expect to spend an average of £12,200 on renovations.
While 63% plan to use their savings, 8% intend to take out an unsecured personal loan, and 5% will remortgage.
Although 57% of homeowners are aware of second-charge loans as a viable funding option for renovations, 40% are overlooking this possibility, potentially exposing themselves to financial stress.
Second charge lending in 2022 totaled £1.71bn, a 45% increase from the previous year, according to Loans Warehouse data.
James Briggs, head of personal finance intermediary sales at Together, said: “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.”
