Your guide to buying a second property

If you’re lucky enough to have the extra income or savings to expand your property portfolio, the UK is a fantastic place to invest. Whether you plan to use the property as a holiday home (like 39% of second property owners in the UK) or are looking to purchase as a long term investment, such as a rental property or retirement home, second home ownership offers several perks.

In this blog post, we share our top tips for buying a second property the right way and without alienating the locals!

Understand what it takes

If you are looking to finance your second property purchase using a mortgage, understanding the criteria for acceptance is crucial. You’ll usually require a healthy house deposit, a solid and reliable source of income, and a good credit score.

If you intend to rent the property out either for a proportion of the year or all-year-round, you will also need to supply details of potential rental income to would-be lenders.

Make sure it adds up for you

Second home ownership is no walk in the park. Should the worst happen, you’ll have multiple properties to foot the bill for. Prior to the financing stage, you’ll also have to build a decent deposit of 25% or more to secure a mortgage product that works for you in both the short and long term.

Some buyers choose to finance the deposit for their second home using equity from their first. It is however important to acknowledge the level of interest you’ll incur by releasing such funds, as well as the increased monthly repayments.

Consider all the costs

The deposit isn’t the only cost that you’ll have to budget for during the purchase process and going forward. The stamp duty rates for second properties will be more than purchasing a main residence – 3% more to be exact! You’ll also be liable for second home council tax, and Capital Gains Tax when the time comes to sell.

Calculate potential income

Whether you’ve considered it or not, letting out your second home either to longer term tenants looking for a buy-to-let or as a short term, holiday home let is an excellent way to fund the ongoing costs of a second property as well as supplement your income.

It isn’t for everyone however. Despite the additional income, turning your second home into a holiday let comes with its own burdens, with property management, high set-up costs, and the risk of letting out the property vital considerations.

If you choose to make the switch from second homeowner to landlord later down the line, it is likely that you will need to alter your mortgage product to obtain the necessary permission.

Be a good second homeowner

The news has been filled with horror stories about locals revolting against second homeowners who leave their properties (and the wider area) desolate during the autumn and winter months.

As a prospective second property purchaser, taking steps to be a responsible second homeowner is therefore important, especially if you plan to rent out your holiday home. Country Life offers their advice on doing just that:

“If you’re renting out your property, ask your guests to keep noise down at night. Look into alternative parking solutions to reduce congestion on local streets, whether it’s you or guests staying. Consider where you’re buying and why. The best reason to buy a second home is because you want to enjoy it yourself (even if the rental income does seem appealing).”

Are you looking to finance the purchase of a second property with a mortgage or release equity to secure an additional home? We can help! Contact our independent mortgage advisors today to discuss your options.