Buying a second home guide

There are many reasons why you may be looking to buy a second home. Perhaps you are buying a second home to rent it out, or looking for a property to buy for a family member. Whatever your reason for wanting to buy a second home, do you truly know what you're getting yourself into? We set out some key information about buying a second home in our guide below so that you are fully prepared.

Buying a second property in the UK is nothing new. And we know that because 10 per cent of British people own a second home! 

Here are three reasons why property owners want to expand their portfolio by buying a second home:

1. A holiday home In the UK

We are all human and there will be times when we need a change from our mundane daily routines. This is why some people choose to buy their own second home as a holiday home to enjoy in the UK. 

If you choose to buy a second home as a holiday home you should be aware of the maintenance costs that come hand in hand with this, not to mention the potential stamp duty cost. Also, you are often required to pay a higher deposit so that the lender has confidence in your ability to pay your mortgages.

2. To help a family member

Buying a second property in the UK is not always for your direct benefit but possibly for the benefit of another. Some people choose to buy a second property for a family member or for a dependent to have as their own home. 

Getting on the property ladder can be a struggle, so some people buy a second home to offer a loved one a helping hand.

Where buying a second home is for the benefit of a loved one to live in, note that capital gains tax accompanies gifting a property.

3. As a buy-to-let

Your reason for buying a second property may not be for your own second home but instead a first home for another. Buy-to-let is where you purchase a second property for this purpose. It can be a very tempting buy as you get an income in the form of rent from your purchase.

Mortgage rates are normally higher for a second home, and when you look for a mortgage for your second home, the mortgage lenders will want to know what the purpose of your second home is. This is because you will need to find a second home mortgage that fits the reason you're buying a second home. We explain this to you below.

1. Holiday home mortgage

When buying your second home for a holiday home, and you plan to let it out as a holiday let to others too, you need a holiday let mortgage. However, there is a rule to get this type of second home mortgage, which is that the property must be a holiday let for at least 210 days per year.

2. Buy-to-let mortgage

A buy-to-let mortgage is a second home mortgage where you buy the property so another person can rent it as their home. As the landlord, you will have an income from this, and if your tenants plan to be in the property long-term, it is illegal not to have this type of second home mortgage for this type of second home.

You should note that getting a second mortgage as a buy-to-let mortgage can require a larger deposit than a regular residential mortgage. Also, when choosing this type of mortgage you may choose a capital repayment or an interest-only buy-to-let mortgage, with the latter being more popular for landlords.

3. Let to buy mortgage

If you're buying a second home but can only afford to do so by renting your current home, you need a let-to-buy mortgage. In this situation, you move into your second home while someone else rents your current home.

You should note that this type of second home mortgage can, however, be tricky to sort out.

4. Residential mortgage

A residential mortgage is suitable if you are buying your second home as exactly that - your second home. This means that you spend part of your time in your current property and part in your second property as your second home. Any lender for a residential mortgage for a second home mortgage will expect you to be able to comfortably afford the mortgage payments on two homes.

This is often the best option to afford to buy a second home and is usually more suitable for an older homeowner as they do not need to sell their property. 

Releasing equity simply means that you use some of the equity in your home as a tax-free cash lump sum as a lifetime mortgage. This is only suitable when your current home will be your main place where you live.

When you buy a second property, there will be plenty of extra costs, such as additional taxes, to pay. For example, you will bear the cost of:

• stamp duty land tax
• income tax
• council tax
• capital gains tax
• potential inheritance tax (if you gift your property and pass away within seven years after this)
• utilities
• insurance
• the decorating price

In addition to tax costs, when buying a second home you need to ensure you can pay any general maintenance costs. For example, if it is a holiday home you may need a cleaner. If you are renting it out as another person's home, you need to be prepared for unexpected costs such as if the boiler breaks down.

Conveyancing is the exchange of property between you and another party. This includes selling, buying or even remortgaging, and of course, includes where the purchase is a second home. There are a multitude of issues that can come up in conveyancing, so you must have a competent solicitor to hand to guide you. Our solicitors are all regulated by the relevant bodies for both legal advice and specifically for conveyancing.

The property market is renowned for not being the smoothest market to tackle, so if you're buying a property it can understandably be a stressful, anxious time. Buying or selling property is a huge responsibility and involves a large cost so you want to get it right. But buying or selling a house is often an exciting time and at Homeward Legal we want you to experience that, so we take all the worries from you. Homeward Legal can look after all your residential conveyancing needs so if you need help with remortgage conveyances for example or perhaps are interested in the transfer of equity conveyancing, we can help.

If you have conveyancing needs, then contact us today at . If it is more convenient for you to drop us a quick line, you can do so here, And we can also provide a fast quote online.

At Homeward Legal, whatever your conveyancing needs, we can always assist. Our mission is to make buying a property speedy with minimal costs and above all, simple. We pride ourselves on having experienced property solicitors throughout England and Wales, who are capable no matter what your conveyancing issues.

Let Homeward Legal help you with all your conveyancing news. Call today or send us a message here. You can also get an online quote here.

^{Last updated 01.12.22}