Second Mortgages
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Taking a second mortgage out on a property is not to be confused with re-mortgaging. A second mortgage in its simplest sense is a secured loan set against the value of one property to allow the purchase of a second. You can compare the best second mortgage deals here using our comparison tables. First however, read this section for pros and cons of taking a second mortgage. More...
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Fixed (no tie-in beyond benefit period) | ||||||
| First Direct Offset | 5.49% | 2 years | 6% | 80% | No Overhang |  |
| Alliance & Leicester Prime | 6.14% | To Aug 2010 | 7.19% | 75% | No Overhang | |
| Derbyshire BS (Direct) | 6.79% | To Sep 2018 | 7.09% | 90% | No Overhang | |
| Fixed (with tie-in beyond the benefit period) | ||||||
| Market Harborough BS (Direct) | 3.99% | 2 years | 7.15% | 75% | Overhang | |
| Capped | ||||||
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Light Adverse Payment History | ||||||
| Skipton BS | 6.19% | To Aug 2018 | 6.45% | 75% | No Overhang | |
| Ipswich BS | 6.49% | To Aug 2011 | 7.24% | 80% | No Overhang | |
| Medium Adverse Payment History | ||||||
| Heavy Adverse Payment History | ||||||
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Discount (with tie-in beyond the benefit period) | ||||||
| Discount (no tie-in beyond benefit period) | ||||||
| HSBC Bank plc (Direct) Purchase | 5.43% | 2 years | 6.25% | 90% | No Overhang | |
| Mansfield BS (Direct) | 5.65% | 3 years | 7.19% | 75% | No Overhang | |
| Barnsley BS (Direct) Branch only | 5.69% | 2 years | 7.19% | 85% | No Overhang | |
| Market Harborough BS (Direct) | 5.95% | Term | 7.15% | 75% | No Redemption | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| HSBC Bank plc (Direct) Purchase | 5.43% | 2 years | 6.25% | 90% | No Overhang | |
| First Direct Offset | 5.49% | 2 years | 6% | 80% | No Overhang | |
| Alliance & Leicester Prime | 5.89% | 2 years | 7.19% | 75% | No Redemption | |
| Market Harborough BS (Direct) | 5.95% | Term | 7.15% | 75% | No Redemption | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Direct Line | 6.39% | To Jun 2010 | 6.5% | 95% | No Overhang | |
| Bank of Ireland 1st Start | 6.99% | To Jul 2013 | 7.09% | 95% | No Overhang | |
| Bristol & West Mortgages First Start | 7.19% | To Jul 2013 | 7.09% | 95% | No Overhang | |
| Coventry BS | 7.39% | To Sep 2013 | 7.09% | 95% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Barnsley BS (Direct) BTL | 6.19% | 3 years | 7.19% | 75% | No Overhang | |
| Principality BS Buy to Let | 6.39% | To Jun 2010 | 7.09% | 60% | No Redemption | |
| Lloyds TSB BTL (Direct) | 6.54% | To Aug 2011 | 7% | 80% | No Overhang | |
| National Counties BS Investment | 6.79% | To Aug 2013 | 7.35% | 75% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Market Harborough BS (Direct) | 6.1% | Term | 7.15% | 75% | No Redemption | |
| Scottish Widows Bank Offset | 6.29% | 2 years | 6.49% | 75% | No Overhang | |
| Yorkshire BS (Direct) | 6.54% | To Jun 2013 | 6.9% | 75% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Mansfield BS (Direct) | 5.9% | 2 years | 7.19% | 75% | No Overhang | |
| Principality BS Direct | 5.99% | To Jun 2010 | 7.09% | 75% | No Overhang | |
| HSBC Bank plc (Direct) Fee Free | 5.99% | Term | 6.25% | 90% | No Redemption | |
Second mortgages have become a popular way to secure future financial health. Some have suggested this is an alternative to pensions, which have undoubtedly received bad press in recent years. Whatever the reason, the number of people owning second properties has been rising steadily.
Second Mortgages for Buy-to-Let
Second properties are usually purchased for buy-to-let purposes over a long-term basis, ensuring that the mortgage is paid and allowing the owner to generate capital gains with the increase in the value of the property. Buy-to-let investments certainly have their merits and have generally proved a success over the years. However, the success of a buy-to-let investment depends on some crucial factors, such as:
- Will the property increase in value;
- Can reliable tenants be found;
- Is the mortgage flexible and suitable for the investor’s needs.
Second Mortgages for Holiday Homes
Holiday homes can provide a valuable nest egg to the investor if he/she plans to sell the property later in life to fund retirement. Like any other form of property investment, however, the success of this investment hinges on the value of the property increasing over the term of the mortgage.
Second Mortgages for Children
Purchasing a second property for children attending university, or second homes for renovation and then resale, is another reason why some people take on a second mortgage. Where the property is located will be crucial to any increasing value. If for example, the property is in a student dominated location, it may prove difficult to sell-on if refurbished for non-students, such as young professionals.
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Second Home Mortgage
A second home mortgage is a mortgage on a property which is not your usual residency. If you do not live in the property that you are mortgaging then this is called a second home mortgage.
Even if you do not have a mortgage on your main property ie, family home, a mortgage on another property would be seen as a second mortgage. In this instance, if you have no other mortgage, your mortgage will be calculated differently in line with second mortgage applications.
For example, when applying for a mortgage (either as a main home or as a second home) it is advisable to declare any loans currently outstanding. These loans (or mortgages) are taken into account when determining how much you can reasonably afford on the new property. A lender may be reluctant to give you a second mortgage without evidence you have income to support it, or be able to provide alternative means of income - as is the case with buy-to-let mortgages.
Summary
1) Second home mortgages may be taken for investment purposes or for a longer term eg holiday home or property for children;
2) A second mortgage is any mortgage that is taken on a property that is not your permanent residential property, irrespective of whether you have a mortgage on the family home.
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