Remortgaging to buy a second property
Property investment is one of the most popular ways for people to invest their money. Historically house prices have consistently risen making them a good investment. Whether you are planning to buy a second home for yourself or enter the buy to let market remortgaging can give you the financial ability to do this. The government is now adding extra taxes and fees to those that are buying second homes but it is still a great investment you can make.
If you are looking for a mortgage to buy a second property is likely that you will need a larger deposit than when you were buying your first property. Depending on your circumstances you may also pay a higher rate than your current mortgage which will increase your monthly payments. To ensure you get the best deal it is advisable to speak with an expert remortgage advisor.
Remortgaging to buy a property
If you are looking at buying a second property and need to raise capital remortgaging your current property is a good way to do this. You will need to have enough equity in your property to be used to raise the capital required for your new property. Lenders will also need to ensure that you will be able to afford the new level of debt so you are able to keep up with the repayments.
Typically people looking to buy another property are either buying a second home for themselves or are buying a property to rent out, these kind of mortgages are known as buy to let mortgages. Sometimes people will look to buy another property to live in and rent out their current property this is known as let to buy.
Second Property Remortgages to buy property
If you are buying a second home for use as a holiday home or for a relative to live in you may be looking to use the equity in your current property to buy or put a large deposit down on your second home. Using the equity you release from your current property will give you a lump sum that you can put towards the purchase of a new property. If you are buying the second home for personal use or for a family member to live in lenders will need you to pass the affordability checks to ensure that you can afford the repayments on two properties. These will be the same kind of checks and assessment that you went through when buying your first property.
If you are using your second property or your current property as an investment and renting it out. Lenders will be able to factor in the potential rental income of the property when they are assessing your application and overall risk in lending.
Remortgaging to buy a rental property
If you want to remortgage your home to purchase a buy to let investment a remortgage will enable you to raise the funds at a residential rate. Residential rates tend to be lower than what is offered for buy to let mortgages. The downside of remortgaging to buy a rental property instead of applying for a buy to let mortgage is that you will not be able to take advantage of the interest only repayment options that you can with a buy to let mortgage. Your monthly payments will also increase and with a larger mortgage you may not be able to get the rate you are currently on which means that you will pay more interest over the period of your mortgage. You may want to remortgage to release a lump sum so that you can put down a lump sum on a second property and get another mortgage on the new property. If this is your situation make sure you take all factors into account, it is best to speak with an experienced mortgage advisor who will be able to advise you on the best route based on your circumstances.
It’s worth noting that when thinking about getting into the buy to let market there will be times when your property may be empty or your tenants fail to pay the rent. To ensure that you are still able to cover the payments so you don’t fall into arrears on your mortgage it is a good idea to keep a separate fund. This will ensure that you don’t get into any mortgage arrears which will affect your credit rating and future mortgages. It’s also worth noting that when it comes to mortgages for second properties some lenders will not have this option available. It’s a good idea to carry out research yourself on which lenders are likely to consider your application, you can also use a whole of market mortgage broker who has experience of these situations and will be able to give you expert guidance. Speak to one of our experienced remortgage experts today by filling in one of our enquiry forms or call us on 0161 209 6700
Things to remember
When looking to get a second property whether for investment purposes or just to have a second home there are other factors you will need to factor in.
Fees – Check the fees that there are for taking out the mortgage product that you want, also take note if there are any early repayment fees and what % the lender charges
Stamp duty – Currently stamp duty on second home buying is an extra 3% so make sure to take this into account
Other fees – If you are buying a property to rent out then there will be other fees such as estate agent fee’s, landlord insurance etc
Buying a second property can be a good investment, ensure that you thoroughly research this and speak with a professional mortgage broker who will be able to advise you based on your circumstances on the best route for you to take to purchase your second property.
To speak with one of our network of specialist remortgage advisors call us on 0161 209 6700 or fill in one of our enquiry forms.