Second home mortgages

A second home mortgage could be right for you if you already own a house or flat and are looking to buy another.

You can apply for a second home mortgage if you want to:

• Buy a weekend retreat or small flat to be closer to work, for example

• Buy a holiday home

• Help a family member buy a property.

If you take out a mortgage for a second home, the process should be just like your first – but with more stringent affordability checks. If you’re already paying a mortgage, taking on the responsibility of another one marks you out as a bigger financial risk for a lender.

Being accepted for a mortgage for a second property largely depends on your finances.

Lenders will assess your credit record and check you can comfortably afford the repayments on two mortgages, plus any other expenses involved in having a second home.

If you have a large disposable income or are close to paying off your first mortgage, you’re more likely to be approved. You’ll also need a sizeable deposit – typically at least 15% to 25% of the property’s value.

Before you apply for a second property mortgage, you’ll need to make sure your finances are in good order. You can use our mortgage calculator to work out how much you could borrow and what the monthly repayments might be.

See more on how to get a mortgage.

If you’re thinking of buying a second home, there is no dedicated ‘second home’ mortgage to apply for. Instead, the type of mortgage will depend on what you want to use your second home for.

Buying a second home to live in

You’ll need a residential mortgage for a second home or holiday home.

Be aware that your mortgage conditions may not allow you to rent out the property as a short-term let, even on sites such as Airbnb.

As a rule, if you want to rent out your holiday home while you’re not living in it, you’ll most likely need a specialist holiday let mortgage (our partner L&C Mortgages can help if this applies to you).

Buying a property to rent out

If you’re going to let out your second property for a rental income, you need a buy-to-let mortgage.

You’ll typically be asked for a larger deposit for a buy-to-let mortgage than for a residential second mortgage, and the interest rates are usually higher.

Landlords often choose an interest-only mortgage to maximise their monthly income. With this type of mortgage, you’ll need a plan in place to pay off the balance at the end of the mortgage term.

Don’t forget to budget for any void periods when the property isn’t let. Rent guarantee insurance is a type of landlord insurance that can help protect you against this.

Buying a second home overseas

Some banks offer international banking services and can help you arrange a mortgage on an overseas property you’re looking to buy.

If you’re buying a second home, you’ll generally need a deposit of around 15% to 25% of the property’s value. Each lender will have its own criteria but the higher the deposit you put down, the more likely you are to get access to better deals.

Some lenders may ask for as much as a 40% deposit if your second home mortgage is for a buy-to-let property.

You’ll be charged a higher rate of stamp duty on a second home. The amount you pay depends on the property value and where you live in the UK.

• In England and Northern Ireland, you’ll pay an additional 5% stamp duty on top of the normal rate payable on the property you want to buy. It only applies when you buy a residential property (or a part of one) for £40,000 or more.

• In Scotland, you’ll pay an additional 8% Land and Buildings Transaction Tax (LBTT) on top of the normal stamp duty that applies to you, on a property worth at least £40,000.

• In Wales, you’ll pay an additional 5% Land Transaction Tax (LTT) on top of the standard rates.

Second-home mortgage rates are typically higher than for a standard mortgage, but a large deposit can help. The bigger your deposit, the lower your loan-to-value (LTV) ratio, which will give you access to more competitive deals.

You can use our mortgage calculator to work out how much you can afford to borrow and how much your monthly repayments might be.

To compare mortgage deals with us, you’ll need to answer a few questions about your budget and deposit, as well as the type of mortgage you’re looking for.

We’ll arrange your results in price order, so you can see at a glance how much you can expect to repay each month. You can also check arrangement fees and second home mortgage rates.

When considering whether you can afford a second mortgage, it’s important to know that your property may be repossessed if you don’t keep up with your mortgage repayments. You need to make sure you’re comfortable with the monthly repayments for your agreed mortgage term.