Buying A Second Home
Depending on your overall circumstances a mortgage for a second home can be available from some lenders. If the second mortgage is for your own residence or for a family member to reside in, then this can often be achieved, subject to affordability, and all the other normal lenders checks and criteria. The cost of running 2 homes is part of the affordability calculation for most lenders.
Lenders will usually want to know that the property will be occupied on a regular basis, and this will also affect the type of home insurance you can get, and how much it costs. If buying a second property to let, then this would be assessed differently.
Your own income from employment and other sources will still be assessed to see if you could afford the extra mortgage should the property not be let for a period of time, but the rental income itself must also meet the lenders stress tests for the mortgage under consideration.
Many lenders will not consider first time landlords, where they have no experience of owning a property.
Land and Buildings Transaction Tax (LBTT)
Whether you are buying a second property for you or your family to live in, or whether it is to be let out, a second property will be subject to a 3% LBTT surcharge in circumstances where you are not selling your own residential property.
This applies to properties valued at £40,000 and over. The charge also applies in circumstances where you let out your existing property, and buy another one for your own residence.
There are now “Consumer Buy to Let” regulations that cover this, as first time landlords are considered to be less experienced, and in need of greater consumer protection. The legislation is fairly complex, and it is important to understand when extra stamp duty will and won’t be payable.
The deposit for a second property
This could come from savings or by using equity in your current home to help fund the purchase. Lenders like to see some commitment coming from yourself, and do not usually allow funding for the deposit to come from personal loans or credit cards.
We can advise on the best way to achieve your goals, thus saving you a lot of potential hassle and expense.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Think carefully before securing other debts against your home. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
For mortgages there will be a fee of usually £100, and we will also receive a payment from the lender.
For Commercial Loans we act as introducers only. The FCA does not regulate Commercial Loans.
The FCA does not regulate loans and some forms of Buy to let mortgages