Advice on second home mortgage :)

newleaseholder

I bought a small flat (under my name only) few years ago, I live in it and everything is fine but now I would like to also buy a house with my partner as a joint application and keep my flat as well. Yes I understand there will be additional stamp duty but are there special considerations about the mortgage application?
I could afford the house price range on my own but it's time to have joint property but I really don't want to sell my small flat as the mortgage is very small, it's in a good location, etc - is it really difficult to justify a second property to lenders? Both flats and house would be in the same town.
(I am full time employed, good credit rating and all the stuff, the question is really about second property)

csgohan4

Everything will be based on affordability, try a couple of lender calculators, even one on here as well. 

newleaseholder

affordability is not a problem but I thought lenders would be asking questions about why I am keeping 2 properties, which one would be my primary residence, etc? 

csgohan4

newleaseholder said:

affordability is not a problem but I thought lenders would be asking questions about why I am keeping 2 properties, which one would be my primary residence, etc? 

Not really, their job is to make sure you can afford it for compliance and regulatory reasons. They don't ask if your buying a second house for a cannabis farm, unless it's another BTL

newleaseholder

oh okay - so might not be so bad then. Affordability should be okay as I am staying well within the advised range.
We want to buy a house but I know it'll take a while to clean it up, do some work here and there and we don't want to have the pressure to move with chains, etc - so buy a house, keep living in the flat then slowly move in!
The mortgage on the flat is really tiny that is really not worth rushing out

maximoose94

Remember that you'll pay increased Stamp Duty on your new second property. 

demontfort

I got a second residential mortgage last year as I wanted to keep my flat to live in close to my work and buy a house to get a bit more space, no plans to rent either out. It was a little tricky and in hindsight I should have used an independent broker. Lenders were suspicious and in some cases such as Yorkshire BS they point blank refused despite my existing mortgage being less than 10% LTV and the new one being 70% LTV on an income multiple of less than 2. In the end I went with Natwest.  I think the key was telling Natwest that I would rent out the flat at some point in the future and just wanted some time to sort the house out first as they didn't seem to like the idea of 2 residential properties.

blue_max_3

I think the second property you own is considered an investment property. When we bought our flat many years ago, the flat above was repossessed and was available at £67,000. We tried to buy on our mortgage, but the only way they would lend is if there was a connection to the flat. Wish we had found a way as it would be worth £650,000 now!

Thrugelmir

newleaseholder said:

affordability is not a problem but I thought lenders would be asking questions about why I am keeping 2 properties, which one would be my primary residence, etc? 

Lenders view affordability differently to borrowers. Personally I'd focus more on the viability of the let property. Not always the pot of gold that people assume. 

areader

I did something similar about 5 years ago. Went the unadvised online route with HSBC and as part of the application simply ticked that it was a mortgage for a second home. As a few posters have mentioned above, subject to a lenders criteria and policies, it can be decided on affordability checks, and I'm fairly sure this is the case with HSBC. An underwriter did call me at some point and I simply explained that my I would spend time living in both properties. 

The link below is for mortgages arranged by brokers, you might expect similar could apply to non-advised mortgages.

http://www.intermediaries.hsbc.co.uk/criteria/residential-lending-criteria.html

We can provide mortgages for second homes if both loans can be serviced entirely from the applicant's salary, subject to our normal credit assessment. This is limited to one property in addition to the applicant's main residence and subject to the below:

• A maximum of two residential properties per applicant can be owned upon completion
• Includes properties that are mortgaged (including on consent to let), unencumbered, abroad or offshore, partially or wholly owned
• HSBC Mortgage lending is limited to a maximum LTV of 80% per property
• Both properties must be for occupation/use by the customer or immediate family, ie spouse, children or parent(s)
• The property must not be let on either an Assured Shorthold Tenancy or Holiday Let basis.
• 'Other outgoings' should include council tax, utility, insurance and property maintenance bills for any residential properties other than the property in the application
• Second homes are subject to a maximum term of 30 years