Struggling to get a mortgage for a second home

Ianbroom

Hi
Does anybody have any advice for getting a mortgage on a second property that we will eventually retire to. We own our main home outright. We have a 25% deposit for the 2nd home saved. The property is worth £200k. We wanted to have an interest only mortgage and we would use some of the equity in our 1st home to pay off the 2nd mortgage when we eventually move permanently.
Any advice welcome.
Ian

MovingForwards

Current ages?
Income?
Employed / self employed?
What will the property be used for before you retire?

The brokers will be able to pass comment with a bit more info

roosterpotatoes

You could remortgage your current home, release the equity, add that figure to your £40k (25%) so realistically you would have more than 25% as a deposit (the solicitors would deal with that in a simultaneous exchange and completion) which lowers your loan to value therefore a better rate.

Then when it comes to retirement, remortgage again (goodness knows what will happen to the housing market though with Brexit and i'm not sure how far off retirement you are), to put toward the new house.

Would you be renting out your first home as you might not need to apply for interest only long term

[Deleted User]

A lot of lenders allow interest only residential mortgages when the plan is to sell up in the future and move to a different property.
The rules for them are very convoluted though but you will find a lot more success with lower ltv on the one you want interest only on.
As above, exore releasing equity from current home to boost deposit to 50% if possible

Speak to a broker as 2nd home mortgages can be an absolute nightmare with some lenders, or a walk in the park with others

Thrugelmir

Is the intention to let this as a holiday home?

Ianbroom

We are both mid 40's
I earn basic £45k/partner part time £20k
Both Employed
Unsure if to holiday let or just to use for us/family and friends.

Thanks

Ianbroom

Unsure yet. We may let it as a holiday let or just keep it gif our own use with family and friends.

Would it be better/easier on a buy to let mortgage?

haras_nosirrah

There are a number of lenders who will allow you to do what you are looking to do.

If it isn't going to be let you can't say it will be a buy to let. Depending on the values of properties will depend on which house you are better getting the mortgage for.

I have done very similar cases for clients as have many independent brokers. In my clients case we remortgaged the existing property and bought the new one for cash but it will depend on the finer details as to which way around is best for you