Second charge mortgages are emerging as an option for one particular type of expense
Around 13% of people in the UK would consider using a second charge mortgage to fund education expenses, with the figure rising to 23% among Londoners, the latest Pepper Money Specialist Lending Study has found.
According to the research, 51% of Brits see second charge mortgages as an option for financing home improvements, while 30% would use them for debt consolidation – traditionally the two most common reasons for this type of borrowing.
Other purposes cited include helping family members with home deposits (19%), raising funds for a deposit on an additional property (16%), and investing in a business (16%).
But with rising education costs, including the introduction of VAT on private school fees from January 2025 and an increase in university tuition fees for new students in 2025, second charge mortgages are emerging as an option for managing these expenses.
“The cost of education is increasing for many and, for parents looking for a way to meet this rising cost, a second charge mortgage could prove a good option for investing in their children’s future,” said Ryan McGrath (pictured left), second charge sales director at Pepper Money.
“Second charges can be used for a wide variety of purposes. Traditionally known for home improvements, our research shows there’s a significant number of people who would consider releasing equity from their home to help finance the deposit on a property for their children or additional property and even business investment, as well as education.”
Paul Zammit (pictured right), chief executive at The Loans Engine, explained that a second charge mortgage “is a quick and versatile way to help customers to achieve their life goals.”
“This may be extending their home or restructuring their finances, but it could also be used for a range of other purposes, including education,” he added. “With the rising cost of school fees and university tuition, we think this will be a growing part of the second charge market. Interestingly, the lack of education and awareness of customers and some brokers of second charge mortgages is arguably restricting further utilisation and overall growth.”
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