Can I Get a Second Mortgage?

Looking to get a second mortgage?

There are many reasons why someone may want a second mortgage. Some homeowners would like a second mortgage to expand their property portfolio or to help out a family member get onto the property ladder.

Since you will have two sets of mortgage payments to account for, it may be harder to obtain a second mortgage compared to your first one. That being said, if you cannot afford the costs that will come with a second mortgage, then your second mortgage application will be declined.

Why would I want a second mortgage? 

In over 20 years of working in the industry, we’ve seen people apply for a second mortgage for one of the following reasons:

• Raise additional funds.
• Buy to Let mortgage, where you purchase a new home with the intention to rent it out.
• Let to Buy mortgage, where you rent out your existing home to purchase a new one.
• Purchase a home for your children / family member.
• Named on an existing mortgage and want to purchase a new home.

Raise Additional Funds

If you’re more than five years into your mortgage term, then chances are you’ve built up some equity in your home. You should be able to withdraw some of this equity in a lump sum of cash.

This situation is known as a further advance mortgage. A further advance is when you borrow more from your current lender to fund something like home improvements or a second mortgage.

It’s up to you what you do with the money that you’ve raised through the equity in your home. Whether you want to use it for another mortgage deposit or for something else is completely up to you.

The amount that you can borrow from them will depend on the amount of equity in your property. Your lender will need strong evidence to prove that you can afford both mortgages. Our advisors can access competitive second mortgage deals and options through our large panel of lenders. 

Buy to Let Mortgage

Whether you’re an experienced landlord with current buy to let properties or new into the industry, you are going to look into obtaining more than one mortgage.

Buy to let landlords with large portfolios will be used to the process of getting more than one mortgage, but if you are just starting off or own a couple, sometimes it can still be best speaking with a qualified buy to let mortgage expert.

Second mortgages in the form of buy to let work similar to your current mortgage. You still have to qualify for the mortgage, put down a deposit (usually 15%-25% of the property) and show that you can afford two sets of mortgage payments.

Of course, your mortgage payments should be covered once you find tenants to live inside the property, however, you may not find some straight away so you need to be able to manage the payments even if nobody is currently living in the property.

Let to Buy Mortgage

There may be an option to get a second mortgage on a newly purchased home so that you can rent out your current one and live in your new property. If you plan on finding a tenant for your current property so that you can move out.

We tend to find, landlords will build their portfolio this way when they want to move into a bigger home themselves.

Second Mortgage to Help Others

If your children/family members are struggling to get themselves onto the property ladder, you can take out a second mortgage in your name and let them move into the property. If you want to go down this route, it’s likely that you end up with a guarantor mortgage.

Named on your existing mortgage and want to buy a new home?

In some situations, you can be listed on two mortgages. Sometimes it’s unintended, sometimes it was planned.

We tend to find, the most common reason we see for people being listed on two mortgages is because of a recent divorce and separation.

Unfortunately, it can be hard to remove your own or your ex-partner’s name from a mortgage because both parties have to agree that it’s okay to do so and prove that they will be financially able to afford a mortgage on their own.

If you are trying to get a second mortgage because of the same or similar situation, it may be slightly harder but not impossible. Some lenders will consider your current personal situation and give you a bit of leeway. 

Alternatively, if you’re named on an existing mortgage in a home that you’re not living in, it may be best to try and get yourself removed if you can. Being financially linked to someone can sometimes bring your overall credit score down, especially if the other party has bad credit. 

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

22nd April 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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