Buying a second home could give you a place to escape to or a base closer to work. Whatever your plans, a second home mortgage may help you fund the purchase while keeping your current home.
Before you compare deals, it helps to understand how both properties will fit into your budget. Alongside the deposit, you’ll need to allow for any existing mortgage, the new borrowing and the day-to-day costs of running two homes.
What is a second home mortgage?
A second home mortgage is a residential mortgage secured on another UK property for your own use. It differs from a second charge mortgage, which adds borrowing against an already mortgaged home.
If you plan to earn rental income, explore buy-to-let mortgages for a rental property or a holiday-let mortgage for paying guests.
Ways to finance your second home
To buy a second property, you could combine savings or borrowing against your current home with a mortgage on the new property.
NEW PROPERTY
Take a mortgage on the purchase
Your deposit covers part of the price, while the mortgage funds the rest and is secured on the second home.
EXISTING PROPERTY
Raise funds against your current home
A remortgage replaces your current loan, while a further advance adds borrowing with your existing lender. Either may fund the deposit, with the debt secured against your current home.
This draws on your equity: your home’s value less secured debts. The extra borrowing still needs lender approval.
If both lenders accept the plan, these routes can work together. Compare their combined repayments and fees, including any early repayment charges or changes to your current rate.
How much deposit will you need?
The deposit you need depends on how much of the property’s value a lender will lend. This percentage is the loan-to-value (LTV), shown below at 75% as an example. Actual requirements depend on the lender and your circumstances.
Illustrative purchase
Amount
Purchase price
£250,000
Mortgage required
£187,500
Deposit
£62,500
Loan-to-value
75%
Lenders also check where your deposit comes from, whether savings, gifts or extra borrowing. A valuation below the agreed price may mean you need more cash.
WORTH KNOWING
If you borrow the £62,500 deposit against your first home, the example adds £250,000 of debt across both properties before fees. Your budget needs to cover both loans.
Can you afford a second mortgage?
Income, credit and mortgage term
Lenders review earnings, debts and credit history alongside your age and retirement income. If you work for yourself, you may need accounts or tax records.
Payments and costs for both homes
Alongside both mortgages, allow for borrowed deposits and household bills, then check payments at higher rates. Even if your first home is mortgage-free, its running costs still count.
Property and how you use it
A property’s condition, lease and intended use can affect lender choice, so mention any limits on year-round occupation.
The mortgage affordability calculator can help you start planning, although confirming extra borrowing requires an assessment of both homes.
Compare second home mortgage rates
Once you know which lenders fit, compare fees as well as the interest rate. A fixed rate gives payment certainty during the deal, while a variable rate can change.
Repayment mortgages reduce the balance as well as covering interest. Some lenders also offer interest-only loans, but you’ll need an accepted plan to repay the debt at the term’s end.
You can compare current mortgage rates to explore the options, then check each deal suits your circumstances and second-home plans.
Plan for the costs of buying
Beyond the deposit, allow for legal fees, surveys and mortgage fees. Check the tax implications too, as keeping another home can mean higher purchase-tax charges.
Where you buy determines the tax system. England and Northern Ireland use Stamp Duty Land Tax (SDLT), Scotland uses Land and Buildings Transaction Tax (LBTT), and Wales uses Land Transaction Tax (LTT). As you plan your purchase, use the second home stamp duty calculator to estimate the tax alongside your deposit and other buying costs.
Once you own both homes, budget for council tax or domestic rates, insurance and upkeep. Check local second-home council tax premiums and keep a cash buffer for repairs.
How the mortgage application process works
01 · PLAN
Check the budget and lender fit
Before you apply for a second home mortgage, check the funding plan and lender criteria. An Agreement in Principle (AIP) then gives an initial indication of borrowing, without guaranteeing an offer.
02 · APPLY
Provide evidence and arrange the valuation
Your income, bank and deposit records help the lender assess your finances alongside the property valuation. This serves the lender’s needs, so consider your own survey.
03 · COMPLETE
Receive the offer and complete
Once you have an offer, your solicitor completes the legal work and coordinates the funds. Any linked loans must also be ready for completion.
How Muttuo can help
We can help you plan the deposit and borrowing across both homes.
Review your deposit and existing mortgage
Compare options from more than 100 lenders across the market
Find lenders that fit your plans
Plan your next property purchase
Tell us about your property plans, and we’ll help you explore suitable mortgage options.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Your second home mortgage questions answered
Can a family member live there?
Some lenders allow this, but who lives there and whether they pay rent can affect your options. Explain the arrangement before applying.
Can I let my second home?
You’ll need your lender’s agreement before taking paying guests or tenants, even for short-term lets. Your plans may require a different mortgage and suitable insurance.
