Start Your Second Home Mortgage Application Today With Lending Expert!
If you are buying a second home, you may need a second mortgage for the second property. This will essentially be another long-term loan which is taken out in your name and held against the property as collateral.
There are many reasons why one might be looking to buy a second property, be it to live in, to use as a buy-to-let property or as another home. Whatever the reason, the second home mortgage will be another mortgage that is separate to any existing mortgages you may have.
Before deciding to purchase a second home, there are many important factors to consider including how much you are looking to spend, the function of the property, and where you will buy. All of this will impact securing a second home mortgage.
Depending on the mortgage lender, the property can only be classified as a second home only if it is not rented out for more than 180 days annually. Additionally, you will need to reside in the property for either 10% of the days the property is rented, or 14 days. For that reason, location and use of the property are important factors to take into consideration.
Using a second property as a vacation home can be great for those with a large family or for those who take regular vacations. In this day and age of flexible or remote working, the vacation home can also serve as an alternative working location to take a break from the monotony of the day-to-day.
A second property may also just be a secondary residence in another city of the same country. This could be a student property for those looking to set up their children in a new city or could be useful for those who have to frequently spend time in another city for work.
Others will choose to take out a second mortgage in order to buy an investment property. This usually means buying a property and flipping it in order to rent out or resell for a profit. For this option, there are usually different requirements and rates when taking out a mortgage so it is important to explore these beforehand.
Before taking out a second mortgage, make sure to share the objectives with your mortgage advisor so that you can ensure that the mortgage suitably meets your requirements.
Lending Expert is a mortgage broker and can compare over 1,000 second home mortgage deals across the UK. Whilst high street banks will typically offer second home mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for interest only, fixed, variable, tracker or have a bad credit history.
Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best second home mortgage according to your requirements.
- Used for renting out property to tenants
- Rates from 1.39% per month
- Borrow up to £2 million
- Loan Term – 1 to 25 years or upon request
- Minimum 25% deposit
- Interest only, fixed, tracker mortgages available
- Rent charged should be 125% to 145% of mortgage repayments
- Free tool to compare second home mortgages
What Is a Second Home Mortgage?
A second home mortgage is a loan which has a fixed interest rate throughout the loan term, regardless of market conditions. They provide stability and predictability as borrowers know exactly how much they will need to pay back each month.
A second home mortgage is a separate loan which is taken out for the purchase of a second property. The mortgage is long-term and is taken out in your name, holding the second property against the loan. It is separate from any existing mortgages and is typically used for the purchase of a second residence, a holiday home or an investment property.
How Much Is a Typical Second Home Mortgage?
In general, mortgage rates tend to be higher for second homes and investment properties. When purchasing an investment property, rates tend to be around 0.5% to 0.75% higher than market rates. However, if taking out a second mortgage for a second home or vacation hone, these rates will only be slightly higher than typical rates for a primary residence.
What Areas of the UK Does Lending Expert Cover as a Second Home Mortgage Broker?
We proudly offer second home mortgages across the entire UK, Scotland and Wales including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.
How Much Can I Borrow From a Second Home Mortgage?
Speak to an expert today in order to find out how much you can borrow from a second home mortgage.
The amount you can borrow for a second mortgage will depend on the equity you have in your property and will be affected by any pre-existing mortgages. Although the amount you can take out will vary from lender to lender, as a general rule of thumb experts suggest a starting point of around 75%-100% of the equity. This is the value of your property minus the mortgage you owe.
Can I Get a Second Home Mortgage?
- Aged 25 to 85 years’ old
- Minimum income of £25,000 per year
- Minimum deposit 25% of overall property value
- Good credit status
- Strong financial record (limited defaults, arrears)
- The property has potential value and can be rented out
The typical deposit required for a second home mortgage is 25% of the property value, with some lenders requiring around 40% to 45%. Larger deposits will usually result in paying lower rates overall, since you have paid off and own more of the property. Putting down a higher deposit may also be a requirement for those individuals with limited financial records or weaker credit ratings.
What Other Factors May Impact Eligibility for a Second Home Mortgage?
Many different factors could impact your eligibility to secure a second home mortgage.
These include, but are not limited to, the following:
- Credit score (this can affect the agreed interest rate)
- Home location
- Deposit amount
- Home price and loan amount
- Pre-existing mortgage and repayment history
Is a Second Home Mortgage the Best Option for You?
Second home mortgages can make the purchase of a second property more affordable and are great for those who are looking for a second residence, a holiday home or for potential investors looking to flip properties for resale or renting.
There are many benefits to having a second property including a place to vacation, a place to retire or an additional source of income should you choose to rent out the property.
Additionally, having a second property can be a great way to diversify your assets. Many people also choose to purchase a second property for the sake of tax brakes. If your second home remains unoccupied when not being used, the interest and property taxes may become fully deductible from your gross income.
What Is the Difference Between Mortgages on Primary Residences and Mortgages on Second Homes?
One of the key differences between your primary mortgage and your second home mortgage is the amount of deposit you will need to initially put down. For example, on your primary mortgage, you may be able to put as little as 5% down depending on factors such as your credit history. However, for second home mortgages this figure is higher with a minimum of 10%.
In general, lenders usually have more strict lending criteria for second mortgages as they understand it as an additional financial pressure for the borrower. For this reason, the interest rate may also be higher than your primary mortgage.
Aside from the higher deposit and higher rate, the general application process for a second home mortgage is similar to that of a primary residence mortgage.
Speak to an expert before making any decisions in order to compare multiple lenders and find a loan that best suits your requirements.
Second Home Mortgage Providers
Many lenders on the market offer competitive rates for second home mortgages.
At Lending Expert, we compare the second home mortgage market in order to find the best provider to suit your needs.
Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.
How Do I Compare Second Home Mortgage Rates?
Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.
Contact us today to speak to an expert and start comparing second home mortgages to find the best option for you.
What To Consider Before Getting a Second Home Mortgage
Prospective buyers should always consider the following factors before deciding to take out a second home mortgage:
- Credit score
- Existing assets
- Loan term
- How does the interest rate compare to market rate
- Break fee (fees incurred if you want to repay your mortgage early)
- Limits on extra payments
In order to buy a second home, it is probable that the individual will need extra money saved in order to cover multiple mortgage payments in the event of a temporary loss of income. Experts suggest a minimum of two-months worth of saved money for this.
Typically, the more money you put down for the deposit and the higher your credit score, the more likely your lender will be to allow a higher debt-to-income for your second home mortgage.
As previously stated, before taking out a second home mortgage you will need to have clear the purpose of the property as this will have an impact. For example, there are strict rules when it comes to offsetting your expenses by renting out your second property when not in use.
In order to qualify as a vacation home or a second home, there are certain criteria the property must meet including:
- The owner living in the property for some part of the year
- Not rented or managed by an external firm
- Belong only to the buyer
If you do not meet the specific criteria, you could risk violating your mortgage terms and becoming a liability for the lender.
What Happens if I Do Not Keep Up With Repayments?
Your second home mortgage is secured against the property meaning that any late repayments will lead to a damaged credit score, late penalties and maybe even risk of property repossession from the bank or lender.
Specifically with second home mortgages, you will need to make sure your monthly budgeting sufficiently covers both the second property mortgage and any other existing mortgage payments.
Why Use Lending Expert As Your Second Home Mortgage Broker?
Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.
Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation.
Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!