Mortgages For Second-Time Buyers

In this article, we’ll explain all the mortgage options available for second-time buyers, including any specific government schemes, and how working with a mortgage broker can be the best way to secure the approval you’re looking for. 

What is a second-time buyer?

Anyone who has previously owned a property, whether purchased using a mortgage or not and is now looking to buy another one would be a second-time buyer. This is the case regardless of the reasons behind the purchase or how long it may have been between transactions.

It also makes no difference if you no longer own – or are named as an owner – of the property (or properties) you’ve bought in the past.

Can you be a first-time buyer twice?

No. You only qualify as a first-time buyer if you have never owned a house, so you can only benefit from perks like first-time buyer stamp duty relief if it’s the first time you’ve bought a property. This includes shared ownership schemes or joint ownership with another person and buy-to-let purchases. Even inherited properties.

What mortgages are available for second-time buyers?

The type of mortgage you’ll need as a second-time buyer will depend on your circumstances. You might be looking to take on a second property in addition to your current home, either as a holiday home or a buy-to-let investment. In the latter’s case, you’d be looking specifically at a buy-to-let mortgage and potentially interest only rather than repayment.

If you’re looking to simply trade up from your current home to a new one, you’ll likely be sticking with a residential repayment mortgage. For this, you’ll need to decide whether to opt for a fixed-rate mortgage or a variable rate.

Is the Help To Buy scheme available for second-time buyers?

Unfortunately, the Help to Buy Scheme closed to new applications at the end of March 2023. Originally, it was available to both first- and second-time buyers before the government introduced a restriction to purely first-time buyers only. 

Are there any other government schemes available?

The mortgage guarantee scheme, available until June 2025, is run in partnership with specific lenders and aims to open up the property market to people with lower deposits. It was originally introduced as a temporary measure in response to the coronavirus pandemic, so speak to your broker as soon as possible if you’re interested.

The other option is the shared ownership scheme. You can’t own another property simultaneously while buying through shared ownership. Still, if you’re in the process of selling and will have your name removed from the existing mortgage before you exchange, then that’s acceptable, even if you’ve bought a shared ownership home in the past.

Deposit requirements

You’ll typically need 10% as a minimum deposit. If you’re moving house, the equity you’ve built up in your first property should, hopefully, be able to cover this rather than using savings or other sources.

Some lenders will consider a 95% LTV second-time buyer mortgage, but you won’t have as many options as a first-time buyer. If a deposit is an issue for you, then it’s worth speaking with a mortgage broker before applying. They can find the most appropriate lenders for you and offer advice on furthering your deposit.

Is it easier to get a mortgage if you already have one?

Although strictly speaking, the eligibility and affordability criteria for a mortgage will be similar whether you’re a first or a second-time buyer, the fact that you already have a mortgage may make it easier to get another one.

One reason for this is that you will have established a track record and shown that you can consistently and on time make your monthly remortgage payments. This is more of an unknown when you’re a first-time buyer, which always brings a slightly higher risk.

As a current homeowner, you should also hopefully find that you have built up some equity over the time you’ve owned the property, meaning you may be in a stronger position regarding your deposit for your next home. A lower LTV (loan-to-value) can make it easier to access the best interest rates and secure a mortgage, as you’ll be seen as a lower risk.

How to get a mortgage if you’re a second-time buyer

When you’re ready to move from your first to your second home, follow these three important steps before you begin your mortgage application.

Find the right broker

Most brokers will talk about having access to the whole market, but not every broker will necessarily have the right mix of skills and experience to be best placed to help you as a second-time buyer. Get the right broker, and they’ll be able to guide you through every step of the process, finding you the best rates, saving you time and, potentially, some money.

Finding the right broker can be daunting, though. That’s why we offer a free broker-matching service. Make an online enquiry, and let us do the hard work for you.

Take stock of your current financial situation

Before your broker starts their research, they’ll need to know where you stand financially to approach suitable lenders. The key things here will be to get an up-to-date valuation of your current home and an accurate balance of your existing mortgage.

From here, you can work out exactly how much cash you’ll likely release from the sale and how this could translate into a deposit for a new home. Your broker will look at this alongside your income and other financial commitments to see how much you can borrow.

Check your credit record

Maintaining a first mortgage will be a big tick on your credit file, but it’s still important to check your current details, as things may have changed since your first mortgage application.

You should also double-check your credit record for any inaccuracies that need to be corrected before you proceed. You don’t want to run the risk of having a mortgage application declined, as this could leave a mark on your record and make it harder to get credit in the future.

Which lenders are available?

Unless your circumstances are very specific, such as bad credit, you should find that all of the usual high-street lenders have a range of mortgage products to suit second-time buyers.

Having a lot of choices doesn’t necessarily make a decision easy, though, so it’s still always a good idea to use a broker to help you pinpoint exactly which mortgage is right for you. A broker can also help you find specialist lenders if you have any particular issues around credit or affordability.

Are rates higher or lower for second-time buyers?

This will largely depend on your circumstances, but in general, if your second purchase is a residential move, then with plenty of equity available – along with a good credit score – you should qualify for the best interest rates as more lenders will be available for you to consider.

If your second purchase is for investment purposes, this will depend on a number of other factors, such as the rental income you can command on the property (if it’s a buy-to-let or holiday home), landlord experience, and the size of the deposit you have available.

Transferring your current mortgage to a new home 

If you’re moving house, you can transfer your existing mortgage to your new property—this is known as mortgage porting. It can be useful if you’re still on an existing mortgage deal, which would incur a fee if it is ended prematurely. 

Typically, moving house involves upgrading to a property valued higher than your existing one.  If this is the case, you can apply for a second mortgage in addition to your existing one to cover any difference in borrowing required.

If it’s a cheaper property, you can move your existing mortgage across (subject to the lender agreeing to the new loan-to-value parameters) or pay down the amount with any equity released when the sale is concluded. 

Speak to a broker experienced in second-time buyer mortgages

With so many choices available for second-time buyers, it’s easy to feel confused and overwhelmed. A broker is invaluable in helping you work through all the options and find the best combination of rates and terms to suit you.

Give us a call at 0330 818 7026 or make an online enquiry, and we can assess your personal circumstances, consider your needs, and match you with the right broker. Our broker matching service is a no-obligation service, and we don’t charge you a penny, so you’ve got nothing to lose.