Remortgage to Buy a Second Home: A Complete Guide for Homeowners & Landlords

Remortgage to Buy a Second Home

Remortgaging your current property to buy a second home is a smart way to unlock equity and expand your property portfolio or purchase a holiday home. A home mortgage can also be used strategically to finance additional property purchases, allowing you to leverage your existing assets for further investment opportunities.

Whether you’re a first-time buyer stepping into the second-home market or a seasoned landlord growing your investment portfolio, this guide will walk you through the process, benefits, and lender options available. Seeking expert advice is crucial to ensure you make informed decisions and secure the best possible outcome when remortgaging to buy a second home.

What Does It Mean to Remortgage to Buy a Second Home?

Remortgaging involves switching your existing mortgage to a new deal, either with your current lender or finding a new lender. This process often means taking out a new loan that replaces or supplements your existing financing. A remortgage deal can offer different terms or rates compared to your current arrangement. When you remortgage to buy a second home, you borrow more against your current property, using the released equity as a deposit or full payment for the new property. Depending on the intended use of the new property, you may need a new mortgage or a second home mortgage, as requirements differ for second homes versus buy-to-let properties. Many homeowners remortgage to buy another property as a strategic way to expand their assets.

Reasons to Remortgage for a Second Property

Many individuals and investors choose to remortgage their existing home to buy property for various purposes, such as:

• A holiday home for personal use or holiday letting
• A buy-to-let property to generate rental income
• A home for a family member (e.g., children at university or elderly parents)
• A second residence for commuting or business use
• To convert an existing property into a rental and move into a new home (let-to-buy)
• To buy property abroad, using released equity to fund an international property purchase
• To purchase a commercial property for business operations or as an investment
• To fund a buy to let investment, expanding your property portfolio through remortgaging

Types of Second Properties

When remortgaging to buy another property, it’s important to understand the different types of second properties available and how they affect your mortgage options. The most common types include residential properties, holiday homes, buy-to-let investments, and commercial properties. A residential mortgage is typically used if you plan to live in the new property yourself, while holiday homes are ideal for those seeking a personal retreat or a property to let out seasonally. If you’re interested in generating rental income, a buy to let mortgage is designed specifically for landlords and often comes with different criteria. A larger deposit and higher interest rates compared to standard residential mortgages. For those looking at business opportunities, commercial properties require specialist lending and may involve more complex approval processes. Each type of property comes with its own set of rules, and mortgage lenders will assess your application based on the intended use. Working with a mortgage broker can help you navigate these differences, compare interest rates, and find the most suitable mortgage product for your needs when remortgaging to buy another property.  

Key Considerations for New Buyers

If you’re new to remortgaging or second-home ownership, consider the following: Your employment status, credit rating, and credit status will all impact your mortgage application. Lenders will also consider outstanding payments, maintenance payments, tax credits, and child benefits as part of your overall financial assessment. Using a mortgage affordability calculator or mortgage calculator can help you estimate how much you can borrow and what your mortgage repayments might be. New buyers should consult a mortgage adviser for guidance through the application process.

Equity & Property Value

Your borrowing power depends on how much equity you’ve built, with the market value of your home being a key factor in determining this. For example, if your home is worth £300,000 and you owe £150,000 on your mortgage (this £150,000 is your existing mortgage balance or outstanding mortgage), you may be able to release some or all of the remaining £150,000, subject to affordability and loan-to-value limits. The equity released will depend on the difference between your property’s market value and your outstanding mortgage. Lenders will also assess whether you have enough equity to qualify for the maximum loan needed for your second property.

Loan-to-Value (LTV)

Most lenders will allow you to remortgage up to 75–90% of your property’s value for a residential second home. Your loan-to-value ratio can impact the mortgage rate you are offered by lenders, with lower LTVs often resulting in more competitive rates. For buy-to-let or holiday let purchases, this may reduce to 70–80%.

Affordability

Lenders will assess your income, outgoings, and overall financial situation to ensure you can afford both the remortgaged loan and any new property repayments. Borrowing more may result in higher monthly repayments, which should be factored into your affordability assessment.

Deposit Requirements

You typically need at least a 15–25% deposit for a second property, which may come from your remortgaged equity.

Second Home Stamp Duty

Be aware of the 5% additional stamp duty surcharge applied to second properties in the UK.  

For Experienced Landlords: Expanding Your Portfolio

If you already own one or more rental properties, remortgaging can be a cost-effective way to:

• Access capital for deposit funding or full purchase
• Increase rental yield by investing in higher-return properties
• Refinance existing properties to secure better interest rates
• Diversify your portfolio with holiday lets, HMOs, or semi-commercial units

Experienced landlords may have two mortgages or even a third mortgage when expanding their portfolio. In some cases, releasing enough equity can allow you to buy a new property with only one mortgage remaining on your original home. A second mortgage or third mortgage can also be used as alternative financing options for portfolio growth. Lenders often assess your rental income, portfolio size, and property type when offering terms.

Remortgage Use Cases

Using your existing home’s equity is a common strategy for funding a second home purchase, with releasing equity often providing the necessary funds.

Scenario	Strategy
Holiday Home	Use equity to buy a countryside or seaside retreat; may require holiday let mortgage if rented out.
Buy-to-Let Property	Release equity to fund a new BTL deposit or, in some cases, to buy a property outright, meaning you can purchase the second property without needing a new mortgage by leveraging the equity in your current home.
Let-to-Buy	Let out your current home and remortgage to purchase a new residential home.
Helping Family	Gift or loan equity release funds to children or parents for their own purchase.

Note: A secured loan (second charge mortgage) can also be used to release funds for a second property, offering an alternative to traditional remortgaging.

Alternatives to Remortgaging

Remortgaging isn’t the only way to finance a second property. Depending on your circumstances, you might consider using personal savings, taking out a personal loan, or requesting a further advance from your existing lender. A further advance allows you to borrow additional funds on top of your current mortgage, often at your lender’s standard rates. Another option is a second charge mortgage, which is a separate loan secured against your property, leaving your existing mortgage in place. This can be a useful way to access more money without changing your main mortgage deal, but it’s important to compare interest rates and fees carefully. Each alternative has its own advantages and drawbacks, so it’s wise to consult a mortgage advisor who can help you assess your options and choose the best solution for your second property purchase.

Step-by-Step Guide to Remortgaging for a Second Home

1. Property Valuation A current market valuation of your home helps determine how much equity is available.
2. Calculate Equity & Affordability Understand how much you can borrow based on income, outgoings, and credit history.
3. Define Your Purpose Is the second home for personal use, investment, or family?
4. Speak to a Mortgage Broker An experienced broker can guide you to the right lenders and ensure you meet criteria.
5. Prepare Documentation Include ID, proof of income, bank statements, property deeds, rental projections if applicable, and details of any outstanding payments.
6. Submit Your Remortgage Application You will need to complete a remortgage application and provide all required documents to your mortgage lender. Apply early to lock in current rates, particularly useful in rising rate environments. Remortgaging before the end of your current deal may result in an early repayment charge, which can be substantial depending on how early you remortgage.
7. Legal Completion Once approved, solicitors complete the remortgage and funds are released to use toward your second purchase. Note that legal fees will be incurred during the completion process.

High Street Lenders for Second-Home Remortgage

Lender	Max LTV	Rates From*	Accepts Second Homes	Key Features
Barclays	90%	4.10%	Yes	Competitive rates, large loans available
Halifax	85%	4.20%	Yes	Flexible repayment terms
HSBC	90%	4.25%	Yes	Low rates for high income borrowers
NatWest	85%	4.35%	Yes	Residential and let-to-buy options
Nationwide	90%	4.15%	Yes	Fixed and tracker deals available
Santander	85%	4.30%	Yes	Interest-only considered

*Indicative rates only. Subject to change and applicant criteria.  

Specialist Lenders for Buy-to-Let and Holiday Let

Specialist mortgage providers can offer tailored solutions for borrowers with unique financial circumstances, such as low income, self-employment, or poor credit history. The table below lists some of the leading specialist lenders and their key features:

Lender	Max LTV	Type	Specialist Features
Shawbrook Bank	75%	BTL & HMO	Flexible underwriting for landlords
Aldermore	80%	BTL & Let-to-Buy	Ideal for portfolio landlords
Paragon Bank	80%	BTL & Portfolio	Accepts complex portfolios and limited companies
LendInvest	85%	BTL	Fast processing and modern platform
Foundation Home Loans	80%	BTL	Accepts poor credit and rental projections
Mansfield BS	75%	Holiday Let	Seasonal income considered

Tax Implications

Buying a second property through remortgaging can have important tax consequences. You’ll need to factor in the additional stamp duty surcharge that applies to second properties, which can significantly increase your upfront costs. If you plan to rent out your new property, any rental income you earn will be subject to income tax, and you may also face capital gains tax if you sell the property at a profit in the future. It’s essential to understand how these taxes will impact your overall investment and mortgage payments. Consulting a tax advisor or mortgage broker can help you navigate the tax landscape, ensure compliance, and make the most of any available tax reliefs or deductions when remortgaging to buy a second property.

Insurance and Protection

Protecting your investment is crucial when remortgaging to buy a second property. You’ll need appropriate building and contents insurance to safeguard your new asset, and it’s wise to consider life insurance or mortgage protection insurance to cover your mortgage payments in case of illness, accident, or death. Income protection or critical illness cover can also provide peace of mind, ensuring you can keep up with mortgage payments if you’re unable to work. A mortgage broker or insurance advisor can help you find the right policies tailored to your needs, so you can focus on enjoying your second property without unnecessary financial worry.

Local Market Trends

Before remortgaging to buy a second property, it’s vital to research local market trends in your chosen area. Understanding the current property market, including price movements, rental yields, and demand for different property types, can help you make a more informed investment decision. A mortgage broker or property expert can provide valuable insights into the local market, helping you assess whether your chosen location is likely to deliver strong returns or long-term value. Consider factors such as transport links, schools, and amenities, as these can all influence the desirability and future value of your second property. Staying up-to-date with local trends ensures your investment remains sound and your new property continues to meet your financial goals.

Advantages of Remortgaging for a Second Home

• Unlock capital without selling your home
• Lower rates than traditional second home loans or personal loans
• Diversify assets and generate rental income
• Flexible borrowing can fund deposits or entire purchases
• Potential tax benefits for buy-to-let investments

 

Things to Watch Out For

• Second property stamp duty surcharge (5%)
• Affordability checks are stricter for multiple properties
• Void periods if buying to let or using holiday lets
• Interest-only mortgages may have tighter exit requirements
• Property value fluctuations can affect your equity later on
• Early repayment charges may apply if you remortgage before your current deal ends, increasing your overall costs

Ready to Remortgage and Buy a Second Home?

If you’re considering a remortgage to purchase a second property, it’s important to have the right guidance. Whether you’re just starting out or you’re looking to grow your portfolio, our expert mortgage advisers are here to help. Before proceeding, make sure to review your credit rating and credit status, and seek expert advice to secure financing for your second home purchase. We can:

• Review your equity and borrowing potential
• Compare remortgage deals across high street and specialist lenders
• Provide tailored solutions for residential, BTL, or holiday-let purchases
• Help you navigate affordability rules and second-home stamp duty

Call us today on 01332 470400 or complete the enquiry form and one of our advisers will be in touch for a free consultation