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Getting a Mortgage on a Second Home

Houses arranged on top of money, Galliard Homes article title reads "Getting a mortgage on a second home"

Buying a second home? Here’s all you need to know about getting a mortgage on an additional property.

What is a second home mortgage?

A second home mortgage is for someone who already owns a property and is looking to purchase a second home. A second home mortgage could be used for several things, such as:

  • A property that is occasionally rented out or is intended for use as a holiday home
  • Helping a member of the family to get onto the property ladder

It is important that lenders are given the correct reason for taking out a second home mortgage as it will affect the type of product and/or interest rate you get.

The conditions for getting a second home mortgage are the same as a first mortgage, however the affordability checks are often harder to meet. This is because you already have one loan which needs to be repaid and the lender wants to be assured you can afford to make both repayments.

What are the types of mortgages for a second home?

If you intend to live in your second home, or if it’s to help a relative onto the property ladder, you will require a residential mortgage. If you decide later that you want to let out the property, you will need to notify your lender and potentially pay an administration fee to switch mortgage types. If this is something you find yourself wanting to do, it would be worth speaking to a Mortgage Broker to discuss remortgage options as it could save you money by moving to a different lender.

If you are looking to purchase a second home with the intention of renting out the property, you will need to take out a Buy-to-Let mortgage.

Buying a second property as a limited company

As a limited company, it is possible for landlords to avoid losing out on tax relief.

Many investors working within the property sector are now choosing to change their approach and are purchasing with a mortgage as a limited company.

However, many of the high street banks are less willing to lend to limited companies as they are treated as self-employed landlords and therefore deemed as riskier prospects. As such, the chances of business failure are deemed much more significant by these lenders. This can make sourcing lending for a limited company a little more complex, which is why it is best to consult a Mortgage Broker who has access to specialist Buy-to-Let lenders.

Looking for a second home? Let us help you find one. Get in touch with our sales team on 020 7620 1500 or browse our available properties.

Visionary Finance is a team of independent and expert Mortgage Advisers based in Milton Keynes, offering FEE-FREE advice and brokerage services to UK clients. If you have any questions regarding First-Time Buyer mortgages or would like to speak to an expert, contact Visionary Finance to discuss your mortgage options.

Mortgages are secured on your home. You could lose your home if you do not keep up with your monthly payments on your mortgage.

Edited: 20th May 2022