When it comes to purchasing a second home, there are a few important things to keep in mind:
- What is the purpose of the second home? Are you buying a second home as a holiday home, or as an investment property? This will impact the type of mortgage solution you will need. For example, when purchasing an investment property, you will typically require a buy-to-let mortgage. If you are going to be renting the property out, the projected income for the property will be factored into the lender’s decision.
- Consider the location. Think about what type of environment you’re looking for, whether it’s a coastal town, a rural village, or a bustling city. Also consider the proximity to amenities, such as shops and restaurants, as well as transport links. This is particularly important if the property will be rented. Researching areas with strong rental demand can also assist in determining the most suitable location.
- Know your credit score. Your credit score is a major factor in determining the mortgage rates you’ll be offered, so it’s important to check your score before you apply. You can get a free credit report from various credit reference agencies, including Equifax and Experian. To find out more, you can download our free guide to understanding your credit score here.
- Know your budget. Buying a second home can be expensive, so it’s important to have a clear budget in mind. Consider the cost of the property itself, as well as additional costs, such as stamp duty, legal fees, and furnishings. Lenders will also take into consideration the remaining debt on your existing mortgage, which could impact your affordability.
- Understand how much deposit you’ll need. When applying for a second home mortgage, some lenders will require a deposit as high as 25%. Of course, having a larger deposit will also be viewed more favourably by a lender.
- Know the additional costs. When purchasing a second residential home, you will pay the additional rate of stamp duty; it is important to budget for this.
- Use a mortgage adviser. Working with a whole-of-market mortgage adviser will enable you to understand which options suit your circumstances the best.
Purchasing a second home requires careful consideration. With the right research and planning, you can find the perfect second home to suit your needs. Remember, it’s always worth seeking independent financial advice from a whole-of-market mortgage adviser to help find the most suitable deal fitting your circumstances and requirements.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
