Second Home Mortgages
Second home mortgage options for you and your family to use for holidays
Second Property Mortgages
Buying a second home needn’t be stressful with House and Holiday Home Mortgages.Buying a second home often isn’t as straightforward as buying a standard residential property, however, many lenders have products to facilitate the purchase of a second home or investment property. House and Holiday Home Mortgages allows you to find the best options to make the process easier than you ever thought possible.
Second Property Mortgages Vs Buy-To-Let
Contrary to popular belief, the second property mortgage isn’t a product in itself. Buying a second property for living purposes is often different from buying one for investment purposes.
If you intend to buy a second property for buy-to-let purposes, a second property mortgage isn’t the right product. Instead, you should apply specifically for a buy-to-let mortgage. If you opt for a second property mortgage and then decide to rent it out, you may need to seek legal permission from your lender and incur admin charges along the way.
Second residential mortgages are the product that you’ll need for purchasing a second home. There are several reasons that you may wish to do this, including but not limited to;
- Gain a holiday home that your family can use to get away from it all.
- Help a relative onto the property ladder.
- Have a place to stay in the city during the working week.
In each of these situations, you’ll need to take out a second residential mortgage, also known as a second home mortgage.
Second Residential Mortgages
Many lenders offer products designed for homeowners looking to buy a second home. While the basic concept of buying the second property is very similar to the first home purchase, there are several factors that need consideration.
Lenders need to know that you can meet the repayment terms of your existing mortgage as well as the new second home mortgage. As such, your finances will come under greater scrutiny throughout the application process. Most lenders will subsequently seek a bigger deposit on the second property, usually at least 15%.
It should also be noted that you will be expected to pay a bigger Stamp Duty fee. The surcharge is currently at 3% on top of the fee already paid. So, if buying a second property that faces a 2% (£125,001-£250,000) duty as standard, the fee is increased to 5%. It’s important to get an accurate stamp duty calculation from your solicitor
When planning to use the second property as a holiday home that is offered to holidaymakers for short-term rentals, a specialised holiday let mortgage is necessary. Some lenders underwrite these agreements on a case by case basis, although there is general criteria guidelines that properties and buyers will typically need to meet.
For most homeowners seeking a standard second home, the second residential mortgage route is the way to go. House and Holiday Home Mortgages can help you find the right lenders and deals to ensure that your second home purchase is as simple and straightforward as possible.
Buying A Second Home For Investment Purposes
Buy-to-let isn’t the only way to generate money from a property. You may also have plans to ‘flip’ the property or develop it before reselling at a profit. Either way, there are two finance products available to you in this situation.
Bridging loans – these are ideal for properties that aren’t currently mortgageable due to lacking facilities. The short-term loans do carry a high-interest rate, but they can be secured against the property and will be offset by the profits made by selling the property post-improvement.
Development loans – these are ideal for property developers that are taking on major restoration tasks before planning to sell. They normally last for 12-18 months while you’ll also need to chip in around one-third of the development costs yourself. Still, they can open the door to several opportunities.
Joint Second Property Mortgages
The majority of lenders are happy to process joint applications for the holiday home or second property. Better still, you won’t be limited to buying the second home with the person you share the primary home mortgage with. This is particularly helpful when helping a relative get on the property ladder.
In most circumstances, the joint second property mortgages are limited to 2 applicants. However, some lenders will extend this to 4 applicants.
When taking out a joint mortgage on any second property, the product stays the same. So, if it’s a residential mortgage, it’ll become a joint residential mortgage. Likewise, if you seek a buy-to-let mortgage, it becomes a joint buy-to-let.
Whatever type of joint mortgage you require, House and Holiday Home Mortgages can help you to find the right solution.
Remortgaging To Buy A Second Property
There’s no specific upper age limit of when you can get a mortgage on a second property, although lenders will have their own criteria. So, if you have equity tied up in an existing property, remortgaging to gain the deposit and free up more capital can support your application and allow you to gain the second mortgage you need.
Of course, you still need to meet the repayments, which is why a broker can help you save time before you approach a lender.
The Difference between Holiday Let Mortgage and BTL
Beginners Tips for First Time Holiday Lets
Third, Fourth, Or Fifth Property Mortgages
If you have the finances and the incentive to buy multiple homes, there is nothing to stop you from doing it. Technically speaking, UK laws allow you to own as many homes as you like. Naturally, though, the more you buy, the harder it can be to secure finance.
Aside from being required to show lenders that you have the capital to meet repayment terms on all properties, you must also prove that the properties are all for residential purposes. You cannot buy a third or fourth home on a residential mortgage if you intend to rent it out. If this is your plan, you’ll need to take out buy-to-let mortgages. Once again, though, it is possible to own multiple properties this way, and it opens up the potential for portfolio mortgages to finance your investments.
Here at House and Holiday Home Mortgages, we’ll help you to follow the right path for your second mortgage as well as subsequent properties. Speak to us today to see how we can help.