Collaborative Post
Do you want to purchase a second home? Maybe you just want to make sure that the home you are buying is suitable and fit for purpose, without making any pitfall mistakes. Either way, you’re not alone. So many people are in the same situation as you are, but there are things that you can do to try and turn things around.
Second Homes May Require a Different Mortgage
If you need a mortgage because you want to finance your second home, then you may be able to choose from multiple types. If you want to buy a second property so either you or your friends can use it, then you may want to opt for a residential mortgage. This is very similar to a regular mortgage, but it is applied to your second home. This is not suitable if you want to let your home out to strangers though, so keep that in mind. If you can, it is wise for you to go through a mortgage advisor or a mortgage broker. They can then work with you to discuss your needs, so you can make the best decision for your family.
You’ll need a Big Deposit
You will need to put up a good amount of cash if you want to take out a second home. This is usually 15% of the property value. If you are looking into buy-to-let, then you may need to put up 25%. If you have enough equity in your property or in your main residence, then it could be possible for you to re-mortgage so you can increase your home loan. This will release cash that you can use for a deposit on the next property you look at. You will also have to show that you have a good income so the bank can see that you can afford the second property. If you want to help yourself, then why not check out these tenancy types so you can figure out if buy-to-let is the right choice for you?
Photo by Scott Webb on Unsplash
Affordability
If you have a good income and if you have a very good deposit, then this does not mean that you can automatically afford the second property. Lenders will usually review the mortgage payments you have, and they will also look at the equity in your home too. On top of this, it is wise for you to look at your other debts and your outgoings. If you can do this, then you can get a good idea of what you can actually afford so you can make the best decisions for your property in general.
Mortgage Rates are Higher
You should know that mortgage rates on your second home are usually way higher when compared to your first home. This is especially the case if you are going for a buy-to-let mortgage. Most of the time you will only pay back the interest on properties like this though so it is important to keep things like that in mind so you can make the best decisions overall.
