Published 23rd November 2019 · Updated 13th August 2023 by Martin Alexander
If you’re considering purchasing a second home, you’ll likely need a second mortgage. We’re often asked whether it’s possible to have two mortgages at the same time, and the short answer is yes.
You may want a second mortgage to purchase a second home, a holiday home, or a buy-to-let. If you have adequate savings, getting a second mortgage could be a smart move. Property values typically increase over time, and lenders pour millions of pounds into mortgages each year.
That said, you shouldn’t rush into getting a second mortgage. One mortgage can be risky, but two mortgages are twice the risk, so starting your mortgage right can make all the difference.
Important: If you want a second mortgage to release equity, you’ll need a second-charge mortgage. A second charge and a mortgage for a second property are different. You can read our article on second charges here. If you want to purchase a second property, you’re already in the right place.
What is a second home mortgage?
A second home mortgage is simply a mortgage for a second property. The second mortgage is then secured against your second property for security, much like your first mortgage. In fact, there’s little difference between first and second mortgages in terms of how they work.
Mortgages for second properties are different from second-charge mortgages. Confusing, we know. Although a second charge involves taking a second mortgage, it doesn’t involve purchasing a second property. The purpose of a second charge is solely to release equity.
A second mortgage is also different from a remortgage. A remortgage is where you switch lenders to replace an existing mortgage with a new one. This is usually done to get a better rate but doesn’t involve purchasing a second property. That being said, you may be able to remortgage to buy a second property. This can be done by releasing equity in your current home, which can then be used as a deposit.
How to get a mortgage for a second home
Getting a mortgage for a second home largely depends on your affordability. Lenders will be aware that you already have a mortgage, so this can work both for and against you.
For instance, lenders are able to assess how you’ve been repaying your current mortgage. Having a great track record can certainly help. On the other hand, you’ll need to meet the affordability of paying two mortgages, which can be difficult.
Affordability is calculated on income and expenditure. If your monthly expenditure is high, then meeting affordability can be difficult. It’s a good idea to minimise your monthly outgoings as much as possible before applying.
Lenders will also assess what you’ll use your second mortgage for. If you purchase a buy-to-let, affordability is focused mainly on rental income rather than income from employment. Most lenders require rental income to cover at least 125% of the mortgage payments.
If you want to purchase a second home, lenders will examine your affordability. This is because your second home won’t generate any additional income. As a result, lenders will focus on whether your existing income is adequate for having two mortgages.
Can I get a second mortgage for a buy-to-let?
If you’re using a mortgage to buy a second home, lenders will expect you to live there. If your second property will be used for buy-to-let purposes, you’ll need a buy to let mortgage.
We understand that plans can sometimes change. If you intend to live in your second home but then decide to rent it to tenants, you’ll have to inform your lender. Furthermore, your lender will need to provide you with consent, and they may charge you a fee to do this.
If you’ll use your second home so a family member can live there, you’ll need a regulated buy-to-let mortgage. Trying to get a conventional buy-to-let mortgage won’t be possible.
You may want a second mortgage to move to a new home before selling your existing one. In this case, you’ll have two residential mortgages but will only be living in one property.
You can also rent your empty property to cover the mortgage for it. This is more commonly known as a let to buy mortgage.
How much deposit do I need for a second mortgage?
The deposit amount you’ll need for your second mortgage depends on whether you’re buying a second home or a buy-to-let property.
If you’re buying a second home, you’ll likely need a 15% deposit. This is usually the bare minimum. Using a larger deposit can unlock better deals and can make getting a second mortgage easier. The reason lenders insist on a 15% deposit minimum is because of the risk involved in having two mortgages.
If you’re purchasing a buy-to-let property, you’ll likely need a 25% deposit. Some lenders may offer mortgages with 15%-20% deposits, but they often come with higher rates, so are rarely recommended.
Read more about second mortgage deposits here.
Stamp duty and second mortgages
Buying a second home in England or Wales will incur stamp duty charges plus an additional 3%. Even if you’re buying a second home to live in, you’d still have to pay the additional 3%. Additional rate stamp duty is charged on any second property, irrespective of whether it’s residential or for investment.
You can apply for a refund on any additional stamp duty you’ve paid if your second home becomes your main residence. That being said, you must sell your other property within three years of buying your second home.
How many mortgages can a person have?
Typically, lenders only allow homeowners to have two residential mortgages at one time. This is because they want to minimise borrowers using residential mortgages as investment properties. Furthermore, there isn’t any real logic on why someone would need several homes to live in.
Owning two homes can allow you to have one main residence and a holiday let for instance. Other situations may warrant owning two homes, such as separating from a partner or relocating for work. Your lender will also ask the reasons for wanting a second home.
It’s possible to have multiple buy-to-let mortgages. Some landlords can even take portfolio mortgages, which allow one monthly mortgage payment instead of single payments for each property. Experienced landlords can take more mortgages as they expand their portfolios. Nonetheless, lenders often have a maximum limit on what they can lend to any given individual or limited company.
Will I need a broker for a second mortgage?
It’s recommended to get a professional opinion before getting a first mortgage, let alone a second one! Although you may understand the mortgage process better than first-time buyers, the process for getting a second mortgage is slightly different.
Assessments for second mortgages go under the microscope as they’re high risk compared to single mortgages. Our advisors submit second mortgage applications almost every day, so we know exactly how to get the most success. We’ll calculate the best deals you’ll be eligible for and do the hard work for you.
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About the author
Martin Alexander
Martin is a senior mortgage advisor who has held a CeMAP qualification for over 15 years while completing an MBA in Global Banking and Finance.