Second home mortgage

Getting a mortgage for a second home is certainly possible but you must consider the circumstances in which you are getting the second home mortgage and get the right type of mortgage so you are not in breach of your mortgage agreement or tax laws.

Using a mortgage broker who could advise you in second home mortgages and their implications may help.

When getting a second home mortgage you should consider the potential tax implications, especially on stamp duty tax.

How will mortgage lenders consider you for a second home mortgage?

As you already have an existing mortgage any mortgage lender looking into your case ill be interested to see how you can repay both mortgages at the same time and still have extra income to live off.

Can you have 2 residential mortgages?

Yes, you can have two residential mortgages but it is important that you have not gotten a residential mortgage for a property you are renting out as you may be breaking your mortgage agreement and this could cause the lender to repossess the home.

Documents required for a second home mortgage:

The mortgage lender will likely request the following documents:

  • Your bank statements for the past 3 months
  • Your tax return
  • Your payslips for the past 3 months
  • Your mortgage statement for your current mortgage
  • Your identity documents

Types of second home mortgages you may be able to get

Getting a second home mortgage with bad credit

Getting a second home mortgage with bad credit may be much harder as many mortgage lenders will not be willing to lend to you if you have missed payments on your current mortgage or you have had non-creditworthy behaviour in the past few months.

It is unlikely you will find a mortgage lender willing to offer you a mortgage but if you do it will likely be at a none competitive APR.

Bad credit could be:

  • A CCJ
  • An IVA
  • A debt management plan
  • A default
  • A bankruptcy
  • A home reposession

Getting a second home mortgage as a self-employed borrower

If you are a self-employed borrower you may also find it hard to get a second home mortgage but it isn’t impossible.

You will have to prove to the mortgage lender that you have a stable income and that you will be able to keep up the repayments on your second home mortgage.

A self-employed mortgage broker may be able to help you achieve this.

Government schemes that having a second home mortgage may disqualify you from

They are:

  • Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
  • Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy- allows you to buy your home at a discount price.
  • Preserved right to buy- same as above.
  • Right to acquire- same as above.

However, you may be able to use a host of mortgages with the help of your family.

They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.