Although you might not have the money saved up to put down a deposit on a second home right now, there are other ways you can still achieve this. Remortgaging is a common path many people take in order to buy a second property, but first, it’s good to understand how this works.
With every monthly repayment you make on your current mortgage, you are gradually shaving off more and more of your mortgage, and in the process, you’re building up the equity in your home. As the equity increases, you can remortgage and release some of the equity to put it towards other things, such as home improvements or, in this case, buying another property.
This is often a common choice for many looking to branch into the buy-to-let market as the equity you have can be put down as a deposit on a second property. To find out more about choosing the right buy-to-let mortgage for you, see our article ‘Should landlords choose a repayment or interest only buy-to-let mortgage?’
Using home equity to buy another house can be an effective way to use money that would otherwise sit tied up in your property. A mortgage adviser will look at your personal and financial situation before making recommendations on how you can achieve your ultimate goal.
Releasing equity in your house to buy another one means that your repayments would be significantly larger than they have been so far. Your mortgage adviser will go through affordability checks with you when you remortgage but you’ll have to show that you can afford to pay these higher repayments on your current wage. Failure to meet these payments could result in the loss of both properties, so it’s important you’re honest and clear with your mortgage adviser.
If you have a different employment status i.e. contractor, freelancer, self-employed etc. you might be concerned about going through the remortgage process. Your mortgage adviser will again be able to offer their expert advice when it comes to your remortgage decision. They will take into consideration your whole situation, including your current income, outgoing etc. and clearly go through all your options so you can make an informed decision that’s right for you. In the meantime, you might want to read our article ‘How to remortgage if you’re self-employed’.
To find out more about remortgaging to buy a second property, please get in touch and we can put you in contact with a qualified mortgage adviser local to you. In the meantime, why not see how much you might be able to borrow using our initial search?
For further information call: 01522 518292
Email: StonebowFS@mab.org.uk or visit: www.mortgageadvicebureau.com
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.