How to get a mortgage on your second home

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Sue Hayward

Sue HaywardAre you a ‘second stepper?’  That’s anyone looking to move up a rung on the property ladder, from your first home to your second.  And that means ‘parents to be’ who are keen to move before starting a family or parents who need to accommodate their already growing family.

Recent research from Lloyds TSB claims over 60% of ‘second steppers’ have been stuck on the same rung of the ladder for over a year.  And it’s not just a lack of available homes causing the problem; negative equity, lack of a deposit or big ‘remortgage’ fees can all cause a financial headache.

How can you get a mortgage?

Ok well the good news is if you’re really stuck there are still some 100% mortgages out there although the choice is very limited.

However, lenders are now becoming more generous with the number of 95% mortgages on offer, with over 50 mortgage products currently on the market for anyone with a 5% deposit. This is 50% more than this time last year.

But to get your pick of the full range of deals you’ll really need to stump up a 25% deposit.

What to watch out for

Check the small print on headline-grabbing low rates.  These can often be a case of ‘swings and roundabouts’ as the rates may look low but deals can come with hefty arrangement fees.

And think about securing a mortgage deal before your household’s down to one income, (even temporarily), as if a mortgage offer is based on ‘affordability’, which means how much spare cash you’ve got each month, lenders may base their sums on the ‘here and now’.

Watch for extras like legal fees and valuation fees which can quickly add up when ‘remortgaging’.  This can cost around £1,000 on a £150,000 property according to Nationwide, so shop around as lenders including both

couple with keys to new homeCo-op Bank and Nationwide will waive fees with some mortgage deals.

Here’s a break-down of all the other costs associated with getting a mortgage – make sure you can account for them!

Sue Hayward is a money and consumer broadcaster, journalist and author. Sue writes and talks on family finance on both radio and television and contributes to many of the women’s magazines and money websites.  Sue’s written two books, the latest of which is ‘How To Get The Best Deal’.