Raising a Deposit Through Remortgaging
The most common approach is to remortgage your primary home to raise a deposit for the second property, then take out a separate residential mortgage on the new home. Lenders typically need a minimum 15% to 25% deposit for a second home mortgage, and the rates may be slightly higher than on a primary residence.
You'll need enough equity in your current home to raise the deposit while keeping your main mortgage at a manageable LTV. For example, if your home is worth £400,000 and you owe £200,000, you have £200,000 in equity. Borrowing an extra £50,000 would take your LTV to 62.5%, still comfortably within most lenders' limits.
Affordability and Lending Criteria
Lenders will assess whether you can afford both your increased main mortgage and the mortgage on the second home. They'll look at your total income, all existing financial commitments, and apply stress tests for interest rate rises. Having two mortgages roughly doubles your monthly housing costs, so you'll need a strong income to qualify.
Some lenders specialise in second home mortgages and may be more flexible than high street banks. A mortgage broker can help you find lenders whose criteria suit your situation and present your application in the best light.
Tax and Cost Implications
Buying a second home comes with several additional costs beyond the purchase price. The stamp duty surcharge for additional properties adds 5% on top of standard rates in England and Northern Ireland. You'll also pay council tax on the second property, and maintenance, insurance and utility costs need to be budgeted for.
If you eventually sell the second home at a profit, you'll likely owe capital gains tax (CGT), as the principal private residence exemption only applies to your main home. Current CGT rates on residential property gains are 18% for basic rate taxpayers and 24% for higher rate taxpayers.
Holiday Lets and Rental Income
If you plan to let your second home as a holiday rental when you're not using it, this can help cover the mortgage costs. However, you'll need to ensure your mortgage permits holiday letting — a standard residential mortgage usually doesn't. You may need a specific holiday let mortgage or consent to let from your lender.
Rental income from holiday lets is taxable, and the tax rules for furnished holiday lettings changed in April 2025 when the previous favourable tax regime was abolished. It's worth speaking to an accountant to understand the current tax position before committing to a purchase.
Important: 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 rate available will depend on your circumstances. Think carefully before securing other debts against your home.