Second Home Mortgages

A second home mortgage is a mortgage on a property that you don’t plan to use as your primary place of residence. It isn’t simply a mortgage on a second property, as even if your main place of residence is rented and you only intend to have one mortgage (for the property in which you aren’t going to be spending the majority of your time), you still require a ‘second home mortgage‘. Despite being designated a second home mortgage, however, the amount you can borrow will still be calculated in the usual way to ascertain precisely how much you can afford to pay back each month.
Typical second home mortgages include holiday homes, homes for children to live in whilst at university or properties purchased entirely for investment purposes.
Another vital consideration when contemplating purchasing a second property is taxation. We strongly recommend that you speak to an accountant or tax advisor before proceeding with the purchase of a second property.
You will be liable to pay capital gains tax when you sell the property, and if this isn’t fully taken into account at the outset, you may find yourself extremely disappointed when the Inland Revenue suddenly hacks a chunk out of your profits.
Tax is also an issue when renting a second property. If you don’t keep track of just how much of each rent cheque actually belongs to the government, you could find yourself with a hard-to-manage bill at the end of the tax year.
In a nutshell: speak to the experts first.