A third of second charge loans used for home improvement

Analysis of second charge loan purposes across its business between January and August found that 33% were used for home improvements compared with just 17% in the same period in 2014.

The reverse applied to debt consolidation – 75% of customers used second charge for debt consolidation in 2014 compared with 36% of customers in 2016.

The data also showed increased use of second charge for property purchases and mortgages – 13% of customers used them for those purposes in 2016 compared with just 2% in 2014. And that was reflected in average loan sizes increasing 83% to £67,301 from £36,742 in 2014.

Marie Grundy, managing director of V Loans, said: “The switch from debt consolidation to home improvement has been dramatic over the past two years and our own loan book demonstrates how the market is changing.

“It is particularly interesting to see the change in views among brokers about borrowers who can benefit from a second charge such as customers who do not want to lose fixed or tracker deals by remortgaging as well as interest only customers and people facing early redemption charges.

“The MCD has speeded up the process by removing cooling off periods and because a solicitor is not required for most second charge transactions this not only helps with the speed of transactions but reduces costs.”