UK Homeowners using Equity in Property
Nov 24, 2006
The Bank of England produces figures for mortgage equity borrowing in the UK each quarter. £240bn has been borrowed in this way since the year 2000 and previously experts have estimated that around 40% of this was spent on home improvements. However, for the first time this year figures are available to give a more accurate picture of how the money is used.
The latest Survey of English Housing carried out by the government found that each year, for the past 3 years, 656,000 people took out loans against the value of their property. The average amount borrowed each time was £33,000. Many people reinvest in their property with 56% using at least some of the money for home improvements. A further 29% paid off other debts. Other choices included buying a car, household items or a second home.
Most people make use of the increase in property prices by extending the loan on their main home. However, 17% choose to move to a smaller house, or cheaper area, in order to release a lump sum. Around 13% borrowed against or sold a second home.
The Council of Mortgage Lenders has welcomed the news that loans raised on property are most often used for home improvements and repaying debts.
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