What Constitutes a Second Home?

Person holding keys

 

Here at Pure Property Finance we source many kinds of finance for our clients, one of these being second home mortgages, but how is this form of finance different from that of a holiday home or a buy-to-let investment? Our residential finance experts explain all below.

What is a Second Home?

A second home is a property purchased with the intent of becoming a residence you solely occupy in addition to your main home. This will be somewhere you visit on a regular basis such as a pied-a-terre in the city used during the working week or a home near the seaside which you live in on weekends.

If you would like to purchase a second property and let family live in it rent free, then this will also be seen as a second property.

How to Finance a Second Home?

If you’d like to purchase an additional home, then you’ll likely require a loan. There are specific second home mortgages designed for this precise requirement.

Unlike remortgaging or second charge mortgages, these are separate to any loans on any of your existing properties, however any debt will be considered when making affordability checks on application.

If you require a second mortgage, we can help.

Please note: As of April 1st 2016, anyone purchasing an additional property to their main residence in England, Wales or Northern Ireland must pay an extra 3% stamp duty. Therefore, the rate of charge is 3% for properties up to £125,000 in value, 5% between £125,000 and £250,000, 8% for £250,000 to £925,000, 13% for £925,000 to £1.5m, and 15% for properties over £1.5m.

How is a Second Home MortgageDifferent from a Regular Loan?

As the purchase of this property is not intended as a money-making venture, second home mortgages tend to have lower interest rates than finance for investment properties. However, these rates will likely still be a slightly higher than those charges on your first mortgage and require a larger deposit too.

If you intend on renting out a property on a permanent basis, then a buy-to-let mortgage is more suitable to your requirements. However, if you intend on using the property on occasion and renting it out for short intervals, such as a few days or weeks at a time, a holiday home mortgage may be a better fit.

Fancy a Chat Though Your Finance Options?

If you’ve found this post interesting and would like to learn more about hot to finance a second property or how to apply for a loan give our helpful (but not pushy) finance experts a call to learn more. Get in touch

Article By Ben Lloyd

November 14th, 2017

Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.

Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.

Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.

Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.

See more articles by Ben

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