Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 12th November 2019 *
Trying to find a provider who can offer you the best mortgage for your second home really depends upon your own personal circumstances. The good news is there’s lots of lenders to choose from, all with different criteria.
With this in mind, it’s good to have an idea about the various second home mortgage providers and how they differ in their approaches. For example, many can be selective when it comes to adverse credit, some are stricter on self-employed people, and others may be unenthusiastic if you’ve just changed jobs.
The good news is that the mortgage experts we work with know the market inside out. They will be able to identify the right lenders who will be able to help you arrange a mortgage for your second home which best suits your requirements.
Once you’ve read the details below, all you need to do to get started is give us a call on 0808 189 2301 or make an enquiry and we’ll arrange for an advisor we work with to get in touch.
As a general rule, second mortgages require stricter terms, and as a result less lenders are prepared to offer them. This is mainly because of the increased lending risk involved with running two separate mortgages concurrently and the strain this could potentially place upon your income should anything change in the future.
If you’re looking at a second mortgage, here’s what to expect from a lender:
Stricter affordability criteria
Mortgage lenders are likely to offer you a lower loan to value (with some insisting upon a deposit of at least 25%). Others will require you to have a minimum amount of equity in your first home (such as 15-20%).
Many lenders will look to ‘stress test’ your finances in order to gain confidence that you can comfortably cover both sets of mortgage payments and associated running costs based on your current income.
Review of your credit history
Like with your first mortgage, your credit history will come into scrutiny. A history of poor credit certainly isn’t a deal-breaker - but it may reduce the number of lenders available to you, since the second mortgage market is smaller.
Concerned about your credit? Speak to one of the brokers we work with, they’ll be best placed to help you find a specialist lender who may be able to help you.
What is your rationale?
Lenders often want to know why you intend to buy a second property. They’ll often want proof that, after the purchase, one of the properties will remain as your main home. The case for a second home is much stronger when the lender can see the genuine need, ie avoiding a three-hour commute by having a flat close to your employer.
If you’d like to know more about what rules and requirements mortgage lenders tend to use when considering applications for second homes get in touch and we’ll arrange for an advisor we work with to contact you.
High street mortgage lenders
Below we’ve outlined some of the better known mortgage lenders, and their current stances on second mortgages. Bear in mind there are a huge amount of lenders out there so speaking to a qualified expert is crucial to ensuring you get the right mortgage for your circumstances.
The type of second home mortgages Nationwide offer can be used for properties both in the UK and abroad. They’ll offer a maximum loan to value (LTV) ratio of 85%, and also consider second homes used for work, accommodation for dependent relatives, or as your new main residence.
Nationwide won’t consider properties that are only to be used as holiday homes, ones that you plan to immediately let out or unique properties such as timeshares or mobile homes.
Halifax are happy to provide mortgages on second properties which will be used as holiday or second homes, and will accept a maximum LTV of 75%. They won’t accept Right to Buy, guarantor applications or Builders Incentive Schemes.
Halifax allow for one residential and three ‘other properties’ in total (which include second homes and buy to let). Though they’ll allow you to let out the second home, they won’t allow letting to immediate family. Relatives can still occupy the property, provided that there’s no formal tenancy agreement.
Santander are happy to consider applications for second mortgages, and will offer a maximum LTV of 80%. However, they stipulate that the second home is for your ‘personal use’ only. An application for a buy to let property, for example, would not be accepted.
HSBC offer a maximum LTV of 80% and will offer a mortgage if both loans can be paid out of your normal income. The second property can only be used by the applicant and their immediate family - HSBC don’t allow any kind of renting out of the property.
Natwest will offer a 90% LTV but stipulate that your holiday home must be for ‘personal use’ only. No buy to let applications would be accepted, on this basis.
Speak to a second home mortgage expert
As you can see from the information in this article, there are lots of mainstream lenders willing to offer mortgage lending on second homes, however, not all are prepared to offer borrowing in every circumstance. This is where we can help.
The advisors we work with adopt a ‘whole-of-market’ approach, therefore they will be able to help you find a lender who will be best placed to assist with your own specific requirements, regardless of what they may be.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...