Knowledge Bank: Capital raising key for clients

Homeowners are utilising second charge mortgages to raise money to invest in BTL, make home improvements and consolidate debt.

Knowledge Bank: Capital raising key for clients

Homeowners are utilising second charge mortgages to raise money to invest in buy-to-let (BTL) properties, make home improvements and consolidate debt, according to Knowledge Bank’s tracker.


Knowledge Bank believes these three contrasting usages highlight the state of the economic situation in the country.

Capital raising featured in three of the top five most searched terms in the second charge market in March.

The second highest searched term was ‘Capital raising to purchase a buy-to-let’, which follows the trend of investors looking to purchase rental properties as the stock market remains volatile and demand for rental property soars.

‘Capital raising for home improvements’ was fourth on the most searched terms’ list.

Knowledge Bank believes this is due homeowners looking to renovate, add an extension, or build an office in the garden, as a result of an extended period working from home.

Brokers were also searching for ‘Capital raising for debt consolidation’, which was noted at number five on the most searched for terms.

This suggests there are clients looking to secure unsecured debts against their homes, so as to bring all their debts into one place and take advantage of the lower interest rate.

In the residential market, as the Chancellor announced an extension to the job support scheme, ‘Furloughed workers’ was the most searched term for the third month in a row.

Throughout 2021, there has also been consistent interest in ‘Income multiple used for affordability assessment’, and this continued in March.

Knowledge Bank believes this suggests despite the return of 95% loan-to-value (LTV) mortgages, homeowners are still looking to maximise the amount they can borrow.

For the first time this year however, there was a search in the top five for lenders who would offer a mortgage to people with ‘Defaults - satisfied in the last three years’.

This highlights that debt held by some of the UK’s population is not a new problem.

Demonstrating the continued interest in the buy-to-let sector, ‘First-time landlords’ was the top criteria searched by intermediaries for the second consecutive month.

‘Lending to limited companies’ featured in the top five terms searched, and has been a constant since July 2018.

In the bridging sector, ‘Heavy refurbishment’ was in the top five most searched for terms for the first time since December 2020.

Matthew Corker, operations director at Knowledge Bank, said: “The second charge market clearly demonstrates the current economic divide in the UK at the moment.

“There are those who have increased their savings through lockdown and are now using a larger deposit to either invest in property, or add to their existing home.

“But there are also those who have been hit hard, either losing their job or being put on furlough.

“With extensions to the stamp duty holiday and job support scheme announced by the Chancellor during the latest Budget, lenders are continuing to adapt criteria to keep up with the evolving market.

“With criteria changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”