13% of people would consider a Second Charge mortgage to pay for education

05 December 2024

The latest Pepper Money Specialist Lending Study has revealed that 13% of people would consider a Second Charge mortgage to pay for education, in London this number rises to 23%.

According to the research, more than half of people (51%) would consider a Second Charge for home improvements and 30% would consider this method of borrowing for debt consolidation – traditionally, these are the two most common reasons for taking a Second Charge mortgage.

Alongside these, 19% said they would consider a Second Charge to provide a deposit for a family member to buy a home, 16% would use a Second Charge to raise funds for a deposit on an additional property and 16% would do so to invest in a business.

However, with VAT now chargeable on private school fees and university tuition fees set to increase, 13% of people say they would consider a Second Charge to pay for education – and in London, this rises to 23%.

The 2024 Pepper Money Specialist Lending Study is available to download now at https://www.pepper.money/file/Specialist-Lending-Study-2024.pdf

Ryan McGrath, Second Charge Sales Director at Pepper Money, says: “From 30 October 2024, school and boarding fees for school terms starting on or after 1 January 2025 are taxable at the standard VAT rate of 20%. In addition, the government has announced that university tuition fees will increase for new student entries from 2025. 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. 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, Chief Executive Officer at The Loans Engine, says: “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. 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.”