Based on the recent data, 4% of households in the UK own a second home. Some of them do it to get a higher profit when selling the house. They buy relatively cheap property, renovate it, and sell it right away. No matter your reason to buy a second property in the UK, you should learn the considerations below.

Stamp Duty Tax  

Stamp duty tax is a tax you have to pay when purchasing property or land in the UK. A person has to pay this tax if they buy a second house with a mortgage, a leasehold property, and shared ownership. The percentage of the tax varies depending on the location and value. You often have to pay 3 percent of stamp duty tax from the buying cost of the property.

Deposit You Should Have 

Let's say you have a plan to buy a second house by taking out a mortgage. If it is so, you need to have a deposit of at least 15 percent of the buying cost. The percentage is higher if you only want to rent the property. In this case, you need to prepare up to 25 percent of the property value as a deposit. The case is different if you have an existing mortgage. The requirements to borrow some money are even stricter for buying a second home. For example, you should deal with higher mortgage rates. Ensure that you also have enough money to pay the maintenance costs once you get the property.

Capital Gains Tax 

Some of you may buy a second house in the UK for investment. You have a plan to sell it when the value increases in the next few years. It sounds great since you will earn more profit from this investment. One thing you should consider is the capital gains tax. It is a tax you have to pay when you sell an asset, including a second home. How much you pay depends on how much you earn from the sale.

Lower the Interest Rate 

You have to fill strict requirements to get a second house in the UK. You would better pay off the mortgage on your main home first. If there is no mortgage you have to pay means that you can save more money for the deposit. The higher the deposit you can show before buying a second house, the lower the internet rate.

Loan Structure

Once a mortgage lender approves your request, you have to pick the best loan structure. Most lenders in the UK take fixed rates for 2 to 5 years to buy a second house. Your payment may change as rates rise and fall. That’s why you should calculate it first to know how changing rates can impact your monthly payment.

The Reason Why You Buy a Second Home

Indeed, you also ensure why you want to buy a second home in the UK. You would better buy a second house for an investment. You only have to charge the rent cost higher than the mortgage repayments. It covers everything you should pay, yet you still earn a profit. Reconsider your plan if you buy a second house in the UK only for a holiday home. Remember! You have to deal with costly maintenance. It means that the house increases your expenses. As long as you can cover all the expenses from the second house, you can buy it whether for investment or a holiday home. On the other hand, you need to prepare a larger deposit and a good credit score to get a new second house in the UK.

Council Tax 

The amount of council tax you have to pay for a second house in the UK is not as costly as the stamp duty tax. Some local authorities often offer a discount for those who want to buy a second house for investment or a holiday home in their areas.

A Normal Mortgage for a Second Home for a Holiday Home

You can request a normal mortgage if buying a second house for a holiday home. In this case, the lenders will ensure whether you can cover all the mortgage payments you have. Lenders will also check your deposit. You would better put around 15 percent for the property’s value to get a normal mortgage. Be ready to pay higher interest rates and fees than on the first mortgage.

Buying a second house in the UK is a bit complex. One of the keys is calculating everything in detail before going further. https://www.mortgagecalculator.uk/ will help you to calculate everything you need to know to buy a second house in the UK, including the mortgage affordability based on your income, loan overpayments, and remortgage. The target is to ensure that you can achieve your goal to buy a second house in the UK.

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