Second Mortgage Advice in Nottingham
There are a lot of reasons as to why a property owner may look to take 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 to move into a home.
You may find it more difficult to obtain a second mortgage, compared to when you took out your first one, as 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 Nottingham, we’ve seen people apply for a second mortgage for lots of reasons:
- Raise money.
- Purchase a new home to rent it out (Buy to Let).
- 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 a good couple of years into your mortgage term, you have most likely built up a portion of equity within your home. Rather than a remortgage, some may look to take out a second smaller mortgage of sorts, to release some of that equity.
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.
It is similar in the way it functions, to a remortgage to release equity. 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 with the same mortgage lender, has its own interest rates and stands separately to 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.
In order to get a further advance, you’ll have to pass an affordability check by your mortgage lender, to make sure that you are able to take out this additional mortgage. The amount you are able to borrow will depend on the equity in your property, though you likely won’t be taking it all out.
Our mortgage advisors in Nottingham 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 a landlord with a lot of experience already, with current buy to let properties to your name or an aspiring property buyer who is thinking of taking that initial leap into the buy to let industry, you’re going to need more than just one mortgage.
Buy to let landlords that have a large property portfolio will no doubt be used to the process of getting more than one mortgage by now, but if you are just starting off or own a couple, it will still most likely be beneficial for you to speak with a mortgage expert.
Having multiple mortgages on buy to let properties is still a similar process to your current mortgage(s).
You will still need to meet the criteria for the mortgage in question, put down a substantial deposit (typically at least 25% of the purchase price) and show that you are able to afford the monthly payments.
Of course, your mortgage payments will generally be covered once you find tenants to live inside the property, however, you may not find some straight away so you need to be able to manage the payments beforehand.
For expert mortgage advice in Nottingham for a buy to let mortgage in Nottingham, feel free to book yourself in for a free mortgage appointment today and we will see how we can help.
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 are able to 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.
It also happens to be commonly occurred with “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 Nottingham 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 your children or family members are struggling to find their footing on the property ladder, you may be able to take out a second mortgage in your name, allowing them to move into the property.
Another popular choice for some, that doesn’t require a second mortgage, is to gift a deposit. Gifted deposits can be a great way to help you to get your family onto the property ladder when they are struggling.
Named on your existing mortgage and want to buy a new home?
In various instances, whilst you may have intended to take out a second mortgage, you may also find that you are listed on two mortgages purely by circumstance.
As an open & honest mortgage broker in Nottingham, the most common reason we see for people being listed on two mortgages is because 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: November 21, 2023
