There has been an increase in demand for financing to fund home refurbishment projects over the past six months.
That is according to a recent survey from Shawbrook Bank, with 87% of second charge brokers witnessing this trend.
The majority of clients are looking for finance options to fund a redecoration project. Some 41% of brokers said their clients were funding the fitting of a new kitchen or bathroom. The same percentage required finance to fund an extension or loft conversion.
The combination of remote working and spending greater amounts of time at home is likely to have led to this rise in demand for refurbishment finance.
A popular way that customers have been funding their refurbishments is through a second charge mortgage. A second charge mortgage, also known as a secured loan or second mortgage, allows customers to borrow money without remortgaging their home.
When asked about their outlook on the future, brokers who specialise in the second charge mortgage market were nearly three times more confident on the outlook for the lending environment for the rest of the year, compared to the end of 2020 when asked previously.
Of the same group of brokers surveyed, 75% said they were confident in the opportunity for business growth when thinking ahead to the remainder of this year. This is a significant rise from just 19% who said they felt confident in December 2020.
Gavin Seaholme, head of sales at Shawbrook Bank Limited, comments: “The past 18 months have required many of us to spend longer at home than we ever would have before. With working, socialising and exercising all taking place within the same four walls it’s no surprise that people are looking to expand or make changes to their homes. While for many savings have gone up in lockdown, taking on a big renovation can quickly add up.”
“If your client is planning to undertake a refurbishment or extension, large or small, it’s important to discuss all of their finance options with them. A number of landlords and property investors continue to rely on personal loans or credit cards to finance their DIY projects, which can be a riskier and more expensive approach to take.”
“Understanding your client’s aims for the project as well as their current financial position will all help to inform the pathway they choose,” he concludes.