Buying a second home - what mortgage do I need?

Illberich

I'm looking into buying a second home that I can use as a base during the week for work rather than renting somewhere - I'll return home to be with the wife at weekends as I do at the moment.

Can I do this using a standard residential mortgage or is there a special mortgage product for this scenario?

Thanks

kingstreet

Normal residential mortgage will be fine.

Illberich

Thanks kingstreet - does it change anything else (like insurance) if I'm only staying there 4 nights a week, or is it treated exactly the same as my main home?

Conrad

Halifax expect you to declare you intend to sell the existing one, Abbey expect you to declare you intend to let out the current one and they will want the rent to more than cover the mortgage.

Speak to your existing insurers about leaving the home unoccupied for part of the week as you may find this means any claim would me rendered null and void (not good if it burned yours and the neighbours house down.

As ever with these cases there's always going to be an element of uncertainty.

With other lenders your income must cover both mortgages of course.

kingstreet

Illberich wrote: »

Thanks kingstreet - does it change anything else (like insurance) if I'm only staying there 4 nights a week, or is it treated exactly the same as my main home?

If it's a flat, for example, I'd expect it to be leasehold and then the buildings insurance covers the whole block.

From the POV of contents cover, I've only seen restrictions where the property is to be unoccupied for a prolonged period. Check with your potential insurer that your absence from the property at weekends isn't going to create a problem.

I've just had a quick look at one or two lenders' criterias and all I can find is a one-liner in the Abbey's which says they'll lend upto 80% for an owner-occupied second home. Conrad may be right about the rental requirement, although if your family will continue to live in the property 24/7 I'd expect a lender to aggregate the two mortgages to see if the total falls within what should be affordable.

The Nationwide criteria is similarly vague, suggesting simply;-

Where your client will own more than one mortgaged property on completion of their new loan with Nationwide the maximum LTV is 85%

Illberich

Thanks Conrad.

Some strange rules there from the mortgage lenders, but will definitely tell the insurers when insuring the new property (existing one should be fine because the wife will be living there full time).

Income covering the mortgages should be ok I believe - but guess we'll find out when we make the application.

Sounds like its a standard residential mortgage and then make sure the insurers know the score - any other advice?

Dave_Ham

You already have sight of this clearly, but lenders are nervous about second residential mortgages as the system has been abused in the past.

Taking as red this is all above board, the lender would expect the respective property locations to marry up to home and employment.

Not that I put anywhere near a lender, but a prospective client wanted to make an application for a property in Ipswich for the same work reasons.

It did not take me long to realise that something was up as he lived in East London and worked for London Underground as some form of engineer.

Unfortunately given the buy to let product fee's sometimes in the region of 3.5% for the product fee, people go looking for alternative solutions and the banks are now wary.

On the income affordability point of view, do be mindful that many banks work off of a rate of 5-6% interest rates for afforability purposes even though much lower rates can be achieved.

Good luck

ACG

I agree with Dave, if the info ties up you should be fine.

Ive had to turn a client away this week as he wanted a residential mortgage for a BTL property. Had to say im not prepared to do it as its my livelyhood at stake.

If what you say is all corrrect then presuming your income supports them both (in the eyes of the lender) you should be ok. insurance shouldnt be an issue, its normally if the property is empty for 30-60 days at a time.

Illberich

Thanks Dave Ham & ACG, now I know I'm on the right track re a mortgage it's time to start looking for properties I guess!