Depending on your income, affordability and the amount of equity built up inside your property, you may be able to take out a second mortgage.
People take out a second mortgage for various reasons, such as for a Buy to Let, Let to Buy, Holiday Let, family purchase, specialist situation or Commercial purposes. If you are considering one of these options, watch the video below or read on to find out how second mortgages work and why one could be the best option for you.
In our twenty years of working as a Mortgage Broker in Sheffield, we have come across many different types of customers that are looking to take out a second mortgage. Here are some of the most common customer scenarios that we come across.
Current or budding landlords may want to invest in another property to climb the property ladder. If you are a landlord and already have more than one Buy to Let in Sheffield, you may find it slightly easier to take out a second mortgage as you’ve already demonstrated that you can afford more than one set of mortgage payments. This does not mean that you are guaranteed a mortgage though. You will still have to pass usual credit checks and affordability assessments.
If you are a First Time Buyer landlord in Sheffield, you will have to prove that you are able to manage two sets of monthly mortgage repayments. Lenders will factor in the equity in your current property, the type of property that you’re buying, the rental income from the Buy to Let and your personal and financial circumstances.
Similarly to Buy to Let second mortgages, If you are planning to Move Home in Sheffield to become a landlord/grow your Let to Buy portfolio, your lender needs to make sure that you can manage both sets of mortgage payments. Some of our customers have already had tenants for their Let to Buy lined up during their second mortgage application process.
Lenders will assess your income, affordability, equity in your current home and personal and financial circumstances before accepting your second mortgage application.
Holiday Let properties are great investments for those looking for an extra source of income. As a bonus, you will also have a place to stay at no added cost!
They work in the same way as Buy to Lets, however, your income from the Holiday Let may be more infrequent. Peak times, e.g., summer or Christmastime may provide you with more income; the lender will factor this into your Holiday Let second mortgage application as there will be times when you will have no rental income to contribute to your repayments.
You will need a large deposit for a Holiday Let as most of the properties in holiday locations are expensive.
Are you looking to take out a second mortgage to help a family member move into a new property?
Housing prices have skyrocketed, and First Time Buyers are struggling more than ever to get onto the property ladder. With this in mind, family members are offering a helping hand and taking out a mortgage in their own name so that their loved ones can move onto a property.
An alternative for parents or grandparents would be to gift their family members a gifted deposit. This can take off some of the pressure of saving up for that 5% mark and could help boost the overall deposit when combined with the applicant’s own savings.
You must be aware that the donor of the gifted deposit must declare in writing that this is not a loan it is a gift that should not be paid back in the future. The donor must also provide bank statements and proof of where the deposit has come from.
If you are in a complex situation and you need to take out a second mortgage, we are here to try and help. A common situation that we come across involves applicants separating or going through a divorce and one party needs to take out another mortgage so that they can move out of the property.
In this situation, your lender will need to make sure that you afford two sets of mortgage payments as you will still be accountable for the repayments on your’s and your ex-partner’s mortgage. When you move out of the property, until your ex-partner can afford the repayments on their own, you will have to contribute towards them.
If you are in a complicated situation and you need to obtain a second mortgage, don’t hesitate to get in touch and we can take a look at your situation. We offer expert Mortgage Advice in Sheffield to all types of customers, struggling with all different kinds of mortgages.
Equity Release is a way to release funds in your home to gain a lump sum of cash. There are different reasons why someone would want to release their equity; some people will use this cash to fund a second mortgage, take out a lifetime mortgage to replace their current mortgage or spend on something else of their choice. The lump sum that you release can be spent on anything you want to. We have seen customers use the money to pay for weddings, buy a new car and even to pay off debt.
Equity release is a very complicated subject, therefore, we would recommend getting in touch with our team to help you through the process. Getting a second mortgage can be difficult enough, never mind getting a second mortgage by releasing equity in your property.
Book your free mortgage appointment online or over the phone today by contacting a member of our team. We can’t wait to hear from you!
Date Last Edited - 22/03/2022