Are You Ready to Buy a Second Home?

It is on a lot of people’s radar to purchase a home. Having somewhere that you own, that you can do whatever you would like with and that you can call home is a dream that a large majority of the population look towards and, as such, when you find yourself in the position to buy a house, it makes sense to go for it. The question really begins to niggle at you when you find yourself in a strong enough position to buy a second property. If you currently find yourself in a state where you might be interested in buying a second property, then look no further as below we discuss the different things that you should consider.

Important Factors to Consider

There are a few important factors that you should consider when you go to purchase a property. These include:

• Even though there are many good organisations who can help with buying a second home, the deposit you need is usually more than that for a first home
• When you buy a second home, they tend to incur a stamp duty surcharge of 3% (this is on top of the normal stamp duty tax rate)
• If you are currently paying off an existing mortgage, then you are going to need to meet some strict criteria that covers affordability requirements
• You will probably find that the mortgage rates for a second home are a bit higher
• There are going to be maintenance costs when you buy the property
• If further on down the line you sell your second home for more than you originally paid for it then you could be susceptible to a capital gains tax bill

What is the Best Way for You to Buy a Second Property?

After reviewing the above, you may be curious as to what the best way to buy a second property is. The general rule is that mortgage lenders usually have quite strict requirements when you want to buy a second home. Ideally, if you are going to go down the route of a mortgage lender, then you should make sure you have paid off all the mortgage on your primary property.

If you want to try and get away with paying a lower interest rate, then you should try to save for as big a deposit as possible. This is because the higher the deposit, the less you are going to have to pay back over a certain period of time.

How Big a Deposit Will You Need?

You may well find that buying a second home can stretch your finances a bit, but you can limit how much of a hold it has over your everyday life by putting a bigger deposit down. Chances are the lender will already want you to have a reasonable chunk of a deposit on hand.

• You’re going to need at least 15%
• If you intend on buying the property to rent, then you will need 25%
• If you intend on securing a mortgage for a holiday home, then the deposit will need to be about 30%