At least one in 10 people would consider a second charge mortgage to pay for education, figures have revealed.
The latest Pepper Money Specialist Lending Study highlighted the pressure of funding the rising cost of education.
In particular, VAT is chargeable on private school fees, while university fees are increasing.
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%.
Meanwhile, the government has announced that university tuition fees will increase for new student entries from 2025.
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Second charge mortgages
Traditionally, the two most common reasons for taking a second charge mortgage are for home improvements or debt consolidation.
The study revealed that more than half (51%) of people would consider a second charge for home improvements, while 30% would consider this method of borrowing for debt consolidation.
Alongside these, 19% said they would consider a second charge to provide a deposit for a family member to buy a home, 16% 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.
In London, this rises to 23%, the equivalent of more than one in five people.
Ryan McGrath, second charge sales director at Pepper Money, said: “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, said: “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.”
