SECOND HOME MORTGAGES

Skip the dead ends, and find the right mortgage deal for your second home.

Second home mortgages are effectively a standard residential mortgage, at the same rates and on the same terms as you would get for your main residential mortgage. However, it is important to note that lenders may have additional criteria and requirements when it comes to second property purchases.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £495. 

What to know

The key to being able to be granted a second mortgage is again based on standard residential borrowing requirements in that the property needs to be used solely for your family and not be used for any business or investment purposes. If you are looking to use the property as a specialist holiday home, it is important to consult with a specialist who can guide you through the process and provide you with the necessary information and options.

In the main, you need to be able to evidence that you can afford a second residential mortgage and all current borrowing and commitments will be factored into any mortgage application. Your finances will be scrutinised as well as the reason for obtaining a second residential mortgage so it is important to seek good quality advise from a fully qualified mortgage broker specializing in this type of mortgage.

Why would you be looking at a second home?

There are various reasons why someone would look to purchase a second home.

  • They may be looking to purchase a property for a close relative to live in
  • They may be looking for a holiday home that their family can use
  • They may be separation or divorce involved and need an additional property
  • They may need a bolt hole for work purposes e.g. main home in the country but work in London during the week.

We’ll support you with round-the-clock service, right through to completion.

Latest Mortage Deals.

We’ve picked out some of today’s holiday let mortgage rates to give you an idea of what interest rates could be available to you.

To discuss your options, call us today on 01242 696235

FAQs.

What is the difference between a buy to let and a second home mortgage?

A buy-to-let and a second home mortgage are two distinct types of mortgage with different purposes. A buy-to-let mortgage is used when purchasing a property with the intention of renting it out to tenants, focusing on generating rental income. It involves an assessment of the property’s rental potential and may have specific lending criteria, higher interest rates, and tax considerations related to rental income.

On the other hand, a second house mortgage is used for acquiring a another residence that will be used personally, such as a vacation house in the UK. The borrower’s affordability is assessed, considering their primary residence and the other house, and there may be insurance and tax considerations unique to other house. Understanding these differences is crucial to ensure the appropriate mortgage type is selected based on the intended use of the property.

How much does it cost for a second home mortgage?
The cost of a second home mortgage, including the purchase price, can vary depending on factors such as the loan amount, interest rate, and duration/term. It’s best to consult with a mortgage broker to get an accurate estimate based on your specific circumstances.
What things do I need to look out for when purchasing a second home?

When purchasing another home, it’s important to consider the implications of capital gains tax (CGT) and income tax. CGT is a tax that applies when you sell a property that is not your primary residence. However, you will only pay tax on any growth in value. There is also a CGT allowance that can help reduce the amount of tax you’ll need to pay. It’s crucial to inform HM Revenue and Customs (HMRC) within two years if your second property becomes your main house to avoid paying CGT and income tax on it when you sell it.

Another important factor to consider is the stamp duty land tax. This tax is higher for second homes, with an additional 3% stamp duty surcharge added on top of the standard rates if the property is worth more than £40,000. The standard rates are tiered based on the property’s value, and first-time buyers pay nothing on the first £125,000 of their main house purchase. However, second homebuyers must pay 3% on that same tier. It’s essential to factor in this additional cost when budgeting for another home and considering the impact on the property’s value. To calculate the stamp duty for your property, you can use a stamp duty calculator.

We would always advise any client to get specialist tax advise from a qualified tax advisor prior to making any firm decisions around purchasing additional property for either their personal use or for investment purposes.

How do lenders look at my affordability in the uk?

To qualify for a second home mortgage, lenders will typically consider factors such as your credit score, debt-to-income ratio, and the property’s intended use. It’s important to demonstrate financial stability and the ability to afford both your primary residence and the second home. Lenders may also require a larger down payment compared to a primary residence, usually around 10-20% of the purchase price. 

When you put down roots, so do we.

Working with our long-standing charity partner, Gloucestershire Wildlife Trust, we pledge to plant a tree in your name when your mortgage completes.