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Can I remortgage to buy a second house?

Can I refinance my mortgage to purchase another home?

Yes, you can. The purchase of a second home for investment purposes through a buy-to-let model or for an actual reason to purchase having a second residence are popular motives that you should refinance your mortgage. There’s no reason to think that the equity you accrued in your first home shouldn’t be used to purchase a second.

What are the most popular purchases for second-purchases?

You’ll need to inform your mortgage adviser the reason for the second house. Not only will this help them to pick the appropriate mortgage product for youbut it’ll also be considered by lenders when determining your eligibility.

These are the commonly used reasons for having an additional property:

Being a landlord

An interest-only buy-to-let mortgage is a popular method to begin an investment portfolio in property. A holiday let mortgage can allow you to purchase a house that is a short-term rental, and when you’re looking to move to a different property, but want to retain your existing home , and then rent to let it, the lease to buy option allows you to modify your mortgage’s terms to suit.

The three different types of letting process can be funded through the remortgage process, which could be the full remortgage, or a second charge to your principal property.

The purchase of a second property

It is possible that you require smaller homes located in the urban area to reduce the commute, and you might also be interested in looking at supporting your elderly parents, or maybe you are interested in the possibility of a holiday home for your family with your own. A second residence that you purchase by means of a second mortgage is possible by a remortgage of the primary home.

The purchase of a commercial property is to use for business purposes

If you’re planning to invest in property to help your company , then an remortgage that has this in mind could be considered by numerous lenders.
One mortgage Three, two, or one?

If the remortgage you take on your first home will be substantial enough to cover the outstanding mortgage, and leave enough money to purchase an additional property at full price You will have two mortgages and the equity released from the first property becoming your deposit on the second.

Rates of loan-to-value for your second mortgage are not likely to be as high than the first mortgage, which is why you’ll want for a deposit 20 percent or more of the new property from the equity from the first.

The mortgages you take out could differ in terms. If the second property you own is a buy-to-letproperty, as an example, the remortgage you take on the home of your family will be a repayment residential mortgage, and the second home will be acquired with an interest-only buy to let mortgage.

The options offered are:

One remortgage exists enough equity the primary property that you can release funds to pay off any outstanding mortgage balance and purchase a second home in full, you’ll be left with a single mortgage tied to the first property.
Two remortgages are the most typical scenario in which there is sufficient equity in the first property to cover the first mortgage and to release the funds to provide a substantial deposit for a second. You’ll be left with an increased mortgage on the property you purchased as well as a second mortgage on the property you are buying.
Three remortgages: In these situations you could seek an additional charge mortgage (sometimes known as secured loan) on the property that you are the owner of and leave the mortgage in force. The funds released by this process would be used to fund the deposit for the mortgage that will be used to purchase another property.

What can I do to remortgage my home to purchase another?

The mortgage process is all about numbers. The equity of your home will play a key role when you apply for a remortgage and so will your credit score, income and your affordability. Let’s take a look at them in more detail:

Your current home equity

Equity is determined by taking the current value of your home and then subtracting the value of all loans secured by the property (the present mortgage). If you own a house that had a market value of £310,000 and the amount on your mortgage is £208,400, your equity is £101,600.

Equity is usually represented in percentages. In this scenario the equity percentage for you is 32.77 percent.

If you want to remortgage to buy another property there are two choices: either obtain a complete mortgage that replaces the original mortgage, or you can get a second charge mortgage that is a separate loan that is secured to the property.

In all instances the total loan-to value (LTV) you can borrow against your home is between 80 or 95 percent (depending on the terms of the lender).

Based on the figures in the previous example:

A complete remortgage up to 90 percent LTV could result in a total amount of £279,000. The borrower would need to repay the mortgage in the full amount (£208,400) and leave an amount of money of around £70,600, which can be later utilized (once all fees associated with it are paid) to make a substantial security deposit for a second home.

Second charge loans, with an institution that is willing to extend up to 95 percent LTV total, will give you the loan amount of 27.77 percent of your home’s value (your equity ), with 5percent remaining in the property, which would give you an overall LTV for each mortgage of 95 percent). This would be £86,087. The second charge will not need to be repaid of the original mortgage , and it would reduce any early repayment charges you’re responsible for.

Refraining from early repayment charges doesn’t mean that a second charge is the only option the factors that influence the terms of your deal such as interest rate, affordability and terms are all relevant when you’re looking for a refinancing. To receive a no-obligation estimate or to get advice to discuss your options, why not call us?

The higher the LTV of your loan, the more flexible your options are and the higher the interest rate you could be expecting.

Your earnings

The amount you can borrow will be determined by the income you earn. Most lenders allow an amount of 4 times your income but some will be able to consider 5x as well as some will stretch up to 6x.

Income doesn’t only refer to your salary, however. Mortgage lenders are prepared to consider your total annual income, which could include everything from steady dividends and bonus payments up to tax credits maintenance, child benefits.

There is a chance to gain an impressive increase in the amount of your loan if you provide careful documentation of your income. It is crucial to be aware of the source for each portion of your earnings since mortgage lenders examine each source in a different way – for instance, many lenders will only look at the 50% of your annual bonuses.


Your financial capacity is determined by analyzing your current earnings and subtracting your expenses. This is crucial in the case of remortgages as well as second mortgages because you’ll be taking on the burden of financial responsibility over your current situation.

The mortgage lender must be responsible and want to verify affordability prior to they will consider increasing the amount of any existing mortgage , or considering you for a new one. Simply put, if don’t prove you can pay for the additional cost the application is likely to be denied.

Remortgaging may come with costs – there’s the fees for the lawyer and the agent to take into consideration, but perhaps most importantly , if you’re attempting to repay your mortgage from an earlier date as part of a refinancing plan, you’re likely to be charged early repayment fees.

It is essential to include the cost of these expenses into your plans Our remortgage experts can be of assistance.

With years of expertise, we’re able to examine your costs in detail and recommend solutions that reduce them and help keep costs down in the event that you decide to pursue the possibility of a second mortgage at a later date in the contract.

For more information we suggest you contact us today to inform us of your ideas?