There has been a rise in the number of people remortgaging because of divorce or separation, new statistics have revealed.
According to figures from conveyancing service provider, LMS, the number of remortgages taken out as a result of break-ups in May made up 5% of the market, up from 2% on the previous month.
It includes borrowers refinancing to remove an ex-partner from their mortgage as well as those who wanted to raise additional funds to cover divorce settlements.
Debts
The data also revealed an increase in the number of people who were remortgaging to pay off debts. In May 16% of the market were remortgaging for this reason, compared to 13% in April.
However, the most popular reason borrowers were remortgaging was because they had reached the end of a fixed-rate deal – 63% of the market was refinancing for this purpose.
Meanwhile, 26% of borrowers were remortgaging in order to fund home improvements, said LMS.
Nick Chadbourne, chief executive of LMS, said: “While most borrowers remortgage to switch deals or save money, we have seen an increase in remortgaging for different reasons this month, including homeowners remortgaging due to divorce or to pay off debts.
“As divorce becomes simpler through innovations such as the Government’s new online divorce system, so too is remortgaging. This may be contributing to the use of remortgaging as a vehicle to raise funds for divorce settlements.”
Popular five-year fixes
LMS’s data revealed five-year fixed rate remortgages were the most popular type of product borrowers used when refinancing. According to its statistics, 42% of customers opted for these deals in May, which is an increase on the 34% choosing five-year fixes in the same month last year.
There has been a decline in demand for these products since April, when 47% of the market was opting for the five-year fixed remortgages.
More equity released through remortgaging
Meanwhile, the study also discovered, the amount of equity released through remortgaging had increased to the highest level in ten months. This, said LMS, happened as the gap between the average remortgaging advance and average redemption value of the original mortgage widened.
Chadbourne added: “The increase in the gap between mortgage advances and redemptions illustrates more borrowers are remortgaging to increase the size of their loans compared to previous months.”
