Second Mortgage Advice in Leeds
There are many reasons why existing homeowners will want to look into taking out a second or even a third mortgage. Some examples of these include using an additional mortgage to expand your property portfolio or to help one of your family members get onto the property ladder themselves.
There may be more difficult to obtain a second mortgage, compared to when you took out your first one because you will now have two lots of mortgage payments to factor in. If you cannot afford the costs of both, you will likely not be accepted for a second mortgage.
Why would I want a second mortgage?
As a Mortgage Broker in Leeds, we’ve seen people apply for a second mortgage for lots of reasons:
- Raise additional funds.
- Purchase a new home to rent out (Buy to Let Mortgage Leeds).
- Rent out your existing home to purchase a new one (Let to Buy).
- Purchase a home for your children / family member.
- Named on an existing mortgage and want to purchase a new home?
Second Mortgage to Raise Money
If you are several years into your mortgage term, chances are you have built up a substantial portion of equity within your property. Instead of remortgaging, some may look to release some of that equity for a smaller mortgage.
This type of mortgage process is known as a further advance. A further advance gives a homeowner the option to borrow more from their current mortgage lender, as a means of funding potential home improvements or the deposit for another property purchase.
A remortgage to release equity will allow you to switch to a better product with a new mortgage lender, releasing a portion of your equity.
A further advance is remortgaging with the same mortgage lender, who will have their own interest rates that will stand separately from your current mortgage balance. Whilst it means you will be paying two mortgage balances to the same mortgage lender, it can often be cheaper than the fees involved in a remortgage.
To get a further advance, you’ll need to pass the affordability check by your mortgage lender, to make sure that you can take out this additional mortgage. The maximum amount you can borrow will depend on the equity in your property, though you likely won’t be taking it all out.
Our Mortgage Advisors in Leeds will take a look at your case and help you to decide whether a remortgage to release equity or a further advance is a more suitable mortgage option for you.
Rent Out a New Property (Buy to Let)
Whether you are new to the industry or an experienced landlord with several buy to let properties to your name, you’re going to need more than just one mortgage.
Buy to let landlords that have an extensive property portfolio will be used in the process of getting more than one mortgage. Whereas if you are just starting, you will benefit from speaking with a mortgage expert.
The process of having multiple mortgages on buy to let properties are similar to any other mortgage route. You will still need to meet the criteria for the mortgage, put down a substantial deposit (typically at least 25% of the purchase price), and show that you can afford the monthly payments, even if you have no tenants living on the property.
For expert mortgage advice in Leeds, if you are looking for a Buy to Let Mortgage in Leeds, feel free to book yourself in for a free mortgage appointment today and we will see how we can help obtain a second mortgage.
Rent Out Existing Home to Purchase a New One (Let to Buy)
Otherwise known as a let to buy mortgage, a variation of buy to let, this is an option that can allow homeowners to get a second mortgage on a newly purchased home, whilst renting out their current property, becoming landlords in the process.
With this type of process, you are planning on finding a tenant to move into your current property, so that you can move out. This is often a popular choice for landlords who would like to move into a bigger home, but keep a property in their portfolio.
You may be familiar with the term “accidental landlords”, people who perhaps never initially planned to become a landlord, with that plan changing as time has gone on.
Our expert Buy to Let Mortgage Advisors in Leeds also specialise in helping customers with let to buy mortgages, so book online today and we will see how we can help with your let to buy process.
Second Mortgage to Purchase a Home For Your Children / Family Members
If you know someone who is struggling to get on the property ladder, you may be able to take out a second mortgage in your name, allowing them to get their footing on the property ladder.
Another popular choice for some that don’t require a second mortgage is to gift a deposit. A gifted deposit can help you to get your family or friend onto the property ladder. Feel free to check out our helpful mortgage guides for more details.
Named on your existing mortgage and want to buy a new home?
In some circumstances, whilst you may have intended to take out a second mortgage, you may also find that you are listed on two mortgages.
As an open & honest Mortgage Broker in Leeds, the most common reason we see for people being listed on two mortgages is that they have become divorced or separated.
Unfortunately, it can be quite difficult to remove either your own or your ex-partner’s name from a mortgage, as not only do you both have to mutually agree on who gets removed, but you also have to prove the remaining party can afford to keep up payments by themselves.
If you happen to still be listed on a mortgage with an ex-partner, it is important to try and get your name removed as quick as you can. This ensures you are less likely to be affected by the financial links to your ex, as if they miss any payments, it could bring your credit score down.
Whilst this is the recommended route, if for some reason you are unable to get your name removed from a mortgage, there may still be mortgage options available to you. Some mortgage lenders will take your personal circumstances into account.
Date Last Edited: September 20, 2024
