A new study has revealed that one in 20 mortgage holders would consider extending their mortgage to pay for cosmetic surgery, equating to 550,000 homeowners.
Mortgage broker Boon Brokers surveyed 2,100 UK homeowners. The research revealed that 7% of male mortgage holders and 3% of female ones felt it would be worthwhile extending their mortgage to pay for cosmetic improvements.
One in five (20%) said they would extend their mortgage to pay for a medical procedure. 13% of 25-34 year olds would consider using the money to pay for IVF or fertility treatment. Twelve per cent of homeowners would release money to lend to a family member.
Worryingly, 7% of mortgage holders said they would consider lying to their lender about what the money was for – pretending they were using it for home improvements.
Depending on the equity available in the home, many mortgage providers prefer additional lending to be used for something which will improve the borrower’s financial situation or the value of the property, with some asking for proof of how the money will be used.
Other reasons people extend their mortgage are to pay for hobbies, to cover day-to-day living costs, to clear debts, to enable them to take parental leave, to pay for private schooling, to fund a wedding and to allow them to purchase a buy-to-let property.
Men were twice as likely as women not only to want to take out additional lending to pay for cosmetic surgery but also to spend on hobbies or a caravan/campervan.
Gerard Boon, partner at Boon Brokers, said: “Mainstream mortgage lenders are typically very strict on a borrower’s capital raising purpose. For purposes like cosmetic surgery, many mainstream lenders are reluctant to lend.
“The key reason is that lenders would view such capital raising as a sunk cost, with no clear benefit to the applicant’s credit profile, income or the property.
“Whereas, if the applicant were to borrow money for home improvements or debt consolidation, for example, the lender is more likely to say yes. This is because home improvements increase the value of their security and debt consolidation reduces the risk of the borrower defaulting on financial commitments.
“Certainly at the moment, with interest rates rising and the cost of living increasing, it could be more risky to borrow on a mortgage for less essential purchases.
“It’s always risky to secure unnecessary debt on your home. After all, if you’re unable to meet the repayments, you risk losing the roof over your head. Any homeowners looking to raise capital through a mortgage should contact a whole-of-market mortgage broker for advice.”
