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What is a second-home mortgage?

A second-home mortgage is a loan that allows you to buy a second property. It’s important not to get this confused with a second charge mortgage, which allows you to take out a loan to access the equity in your existing home.

Typically, the kind of second-home mortgage you get will depend on what you plan to do with the new property. Most lenders have different options that might suit your needs.

Second residential mortgage 

This is what is most commonly meant by a second-home mortgage. Most lenders say the property must be for personal use only, for example as a second residence or a property closer to work to use during the week. Some lenders will let you use a second residential mortgage to provide accommodation for dependents, but others have rules preventing this. Most will allow you to buy a holiday home, but it does vary by provider. Some allow you to let out the property periodically, but most say you need a commercial buy-to-let mortgage to do this.

Buy-to-let mortgage

If you’re planning to get a second home that you rent out, you likely need a buy-to-let mortgage. If the property is a holiday property, you might need a holiday-let mortgage, which can be different to a typical buy-to-let. You usually need a commercial mortgage, even if you plan to use the property as a holiday home for your family most of the time and only let it out every now and then. If you want to buy a property in the UK for renting out, you can compare buy-to-let mortgages here.

Overseas mortgage

If you’re planning to buy a second home abroad, you may need a specialist lender. Most high street banks will not allow you to use a second-home mortgage to buy overseas, although some have international mortgage services you can use.

How to compare second-home mortgage deals

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Who is Mojo?

Mojo is a free online mortgage broker. We partner with them so you can get all the mortgage support you need in one place.

Mojo will find out about your circumstances, check your eligibility, and search across the whole of market to help you secure the best mortgage for your circumstances.

An expert will be on hand to offer help and advice and you will be supported through each step of your mortgage application.

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How to get a mortgage for a second home

The process of getting a mortgage for a second home is not dissimilar to getting a first residential mortgage.

First, work out what kind of mortgage you need, and then you need to find a bank or building society that’s happy to lend you the cash.

As with any mortgage, you’ll want to shop around to get the best deal. For a second-home mortgage, you should consider speaking to a specialist broker who can help you find the right lender for your circumstances and the best rates.

You need to answer questions about the intended use of the property, so the lender can ensure that you’re applying for the right product.

You also have to meet strict affordability criteria, as you did with your primary residence. If you’re still paying off your first mortgage, these repayments will be taken into account by lenders. You won't be approved if you can’t afford to make the repayments on top of your existing mortgage.

A deposit for a second-home mortgage is likely to be higher than for a first home. For instance, most lenders want you to have at least 15% and some ask for even more.

If you want a buy-to-let mortgage, you typically need a deposit of at least 25%. If you want a holiday-let mortgage, you might need as much as 30% as a deposit. 

There are other costs too. You’ll have to pay second home Stamp Duty which is an additional 3% on top of what you’d pay for a first home. Interest rates are typically higher too, which means your borrowing will be more expensive.

Man sitting outside holiday home

Are second-home mortgages the same as normal mortgages?

They’re very similar financial products: they’re loans with interest attached used to buy a property. You still need a deposit and are subject to affordability and credit checks.

The main differences are that lenders ask for a higher deposit, the affordability checks may be more thorough, you typically pay higher interest rates, and you attract extra Stamp Duty charges.

In a nutshell, second-home mortgages tend to be more expensive, and you need more up-front capital to get one.

Can I afford a second mortgage?

The first thing to consider is that you’ll need a hefty deposit. The absolute minimum is 10% but most lenders want between 15-30% as a minimum depending on what the property is for. You’ll also need to calculate Stamp Duty and make sure you’re adding on the 3% second-home surcharge. On top of that, you need accessible cash for surveyors and lawyers.

Once you’ve got your deposit together, there’s also a question about repayment affordability. Lenders carry out checks to make sure you can pay what you owe before they offer you a mortgage.

They will consider how much you already pay towards your current mortgage – and will need to be certain that you can pay both. 

If you are buying property as an investment, the lender will look at how much rent you could charge for it. They take this into consideration when they work out how much you can afford.

Interest rates for second-home mortgages

Second-home mortgage interest rates tend to be higher than standard mortgage deals. But the higher your deposit, the better the rate you’ll be able to access. You need to choose the type of interest rate you want, too. For instance, are you looking at fixed rates, variable rates or even interest-only? Here is how to decide what type is best for you.

You also need to consider the length of the mortgage. Twenty-five years is standard, but there are lots of options available. The term shouldn’t affect interest rates, but it will impact affordability.

You can work out how much you can borrow using our calculator.

If you need help finding a mortgage, you can contact a broker to get an idea of which companies may accept you and the deals that best suit your finances.

Stamp duty for second homes

Second homebuyers pay an extra 3% in Stamp Duty. The total amount depends on the price of the property you buy.

Updated 6 April 2022
Property priceFirst home Stamp DutySecond home Stamp Duty
£0 - £125,0000%3%
£125,001 - £250,0002%5%
£250,001 - £925,0005%8%
£925,001 - £1.5million10%13%
Over £1.5million12%15%

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