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This is according to the information from SecuredLoans.com, who have seen a rise in those looking to secure a loan on their home to pay off existing debt.
The next most common reason for taking out a secured loan was for home improvements at 25%, with households looking to spruce up a kitchen, bathroom or add an extension for living and investment purposes. Around 17.6% of customers used secured loans for a combination of both debt consolidation and home improvement loans.
Last year, the secured loans industry was renamed to second charge loans by the city regulator. Homeowners use second mortgages on their home, flat or car to borrow money and fund their lifestyles. The amount they can borrow is typically less than their main mortgage and the loan-to-value is lower too since it becomes the second priority when it comes to making their monthly repayments.
Using secured loans for funerals, weddings, education and business purposes typically consisted of less than 1% of the total loan requests.
Debt consolidation involves taking all your existing debts across loans, credit cards, student debt and car finance and using one loan to pay them all off. Rather than trying to juggle multiple creditors at once, there is an opportunity to 'consolidate' all existing payments so your loan covers them all and you clear the debt sooner.
The most traditional way to pay off your debts is to use your existing income, savings or when you have more funds available after downsizing your home. However, in the case of many Britons, there is an opportunity to leverage the value of your existing property and funds can be available within a few weeks through secured lenders such as Norton Finance, UTB Bank and Evolution Money.
Those looking to borrow the maximum amount will benefit from having a good credit history, low loan-to-debt ratio, strong income and valuable property which they can borrow against.
