Updated: December 17, 2021

Getting Another Mortgage If You Already Have One

Buying a second property and unsure how to finance it? Getting a second mortgage might be the answer - read our in-depth guide to find out how to do it!

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No impact on your credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 17, 2021

There’s lots of reasons why someone might want to apply for a second mortgage. Perhaps you have your sights set on a holiday home or an investment property. Maybe you’re between homes and want to build a new one.

This guide provides all the information you’ll need on how to get a mortgage for a second property, what the process involves and where to look for guidance to give your application the best chance of success.

Can you get a mortgage if you already have one?

Yes, it’s possible. In fact there’s plenty of lenders who can offer second mortgages but, as with everything to do with home ownership, the key factors are:

  • Affordability
  • Size of deposit

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What’s the difference between a second mortgage and a second charge mortgage?

A second charge mortgage can be confusing because it can often be called a ‘second mortgage’ too. But a second charge mortgage is quite different.

The table below illustrates how these two types of mortgage differ from each other…

Second Mortgage Second Charge Mortgage
Is a separate mortgage on a different property you own Is a secured loan on your existing property
Is a long-term loan against an additional property you’re trying to buy

Affordability checks are stricter because the repayment risks are considered high. You will have a second deposit to pay but it will probably be a cheaper loan than a SCM

Uses equity in your existing property towards your new purchase

Affordability checks are not as tight because your first home acts as security. However, it’s likely to be a more expensive loan

Repayments are not linked to your existing mortgage. You will have two separate mortgages to repay at the same time. The bank is only allowed to seize the second property should you fail to make the repayments on that loan Equity in your home is seen as the most secure form of lending, so this can be used for security against a new substantial loan. The bank could seize your existing property if you cannot pay your debt

How do second mortgages work?

Second mortgages essentially work in the same way as any other. They are a separate home loan secured against a property you own, in addition to your main residence.

They do not replace or combine with your first mortgage, so you will make two repayments each month. Interest charges can be higher for a second mortgage and the affordability assessments may be slightly stricter to ensure you can meet all your financial obligations.

Lenders typically charge higher rates and have a stricter criteria assessment for second mortgages because extra debt carries a greater risk. In other words, they will be concerned about whether you can afford another mortgage on top of your existing one.

To offset the perceived risk, it’s not uncommon for lenders to ask for a larger deposit as well as charging more in interest. It’s also not uncommon for them to carry out extra scrutiny on your affordability.

An experienced mortgage broker will be able to talk you through what lenders could ask for, so you know what to expect. They will also look for the best possible deals out there to try and minimise the extra costs lenders will want to charge you.

How to get approved for a second mortgage

If you want to apply for a second mortgage, there’s a few simple steps you can take at the outset to make the process much more straightforward.

Step 1.
Step 2.
Step 3.

Get your documents ready:
You will be asked for more evidence of your affordability with a second mortgage. Gather all your paperwork as proof that your income can cover the costs of two mortgages. Being organised early will help you to be thorough and save time during the application process too. Documents required include proof of address and proof of income (payslips and bank statements), usually from the last three months.

Check your credit:

You will understand whether you’ll have hurdles to overcome if you already know what kind of credit score you have. Make sure there are no mistakes in your file. If you still have time ahead of you, reduce your spending or consider paying more off your first mortgage to be in a better financial position.

You can download all your credit reports using our simple guide through the link.

Speak to a mortgage broker:

The next step is to get professional guidance from a broker who is experienced in helping people get additional mortgages for new properties. They will support you through your application with expert knowledge and advice to ensure you’re heading in the right direction. Partnering with a good broker boosts your chances of finding the right mortgage lender with the best deals from the start.

Our free, broker-matching service allows us to quickly assess your circumstances so we can pair you with a mortgage advisor who’s right for your needs. Make an enquiry to get started.

What’s the eligibility criteria?

What lenders want to see is a good credit score and a healthy level of disposable income and enough mortgage deposit (the more, the better), which reassures them that you can afford to pay back a second mortgage without running into trouble.

The other key factors lenders will look at would be:

  • Age: There is no legal age limit for a second mortgage, but all lenders will set their own upper age limits and the length of the mortgage term. As a minimum you must be over 18.
  • Homeownership requirements: You will be in a better position to get a second mortgage if you’ve  had a mortgage on a property that’s worth at least £75,000 for six months or more. Some lenders insist on it for the likes of a buy-to-let mortgage especially.
  • Equity: The more equity you have in your first home, the better position you will be in for securing a second mortgage. The equity in your first home will probably need to be more than the balance you need for a second mortgage for most lenders.
  • Earnings and outgoings: Simply relying on how much you earn is not enough to reassure lenders that you can afford a second mortgage. How you cope with your personal finances generally is an important factor, your spending habits and if you can ride out periods of financial loss or stress (losing a job, being on maternity leave, hikes in bills), and even how to deal with increases in income too.

How much deposit do you need?

Lenders demand a larger deposit for a second mortgage than they might do for your first due to the bigger risk involved. You should expect to need at least 15-20% deposit, although it will depend on a few criteria:

  • Type of mortgage (buy-to-let / residential)
  • Credit history
  • Affordability and current mortgage conduct
  • Type of property

The more money you put down as a deposit, the stronger your application and the more likely it is that you’ll get a better deal. Your broker will know which lenders are likely to require a higher deposit than others, and where your criteria fits.

Getting a buy-to-let mortgage if you already have a mortgage

Generally, (but not always), you will need to already have a residential mortgage if you want to apply for a buy-to-let mortgage. It is proof of your ability to manage this level of borrowing.

If you want to apply for a Buy-to-let mortgage here’s a few key points to consider:

  • Lenders ask for higher deposits. Expect to pay about 25%, although it can be anywhere between 20-40%.
  • Rental income is a factor. Lenders like the potential rental income to be at least 25-45% higher than the mortgage repayments.

Can you have multiple buy-to-let mortgages?

Yes, you can. Some lenders are willing to offer more than one buy-to-let mortgage but this is dependent on those strict criteria already set out and whether you have the required deposits.

Landlords who own at least four properties may be eligible for a buy-to-let portfolio mortgage. This allows a single umbrella mortgage to cover all loans across all properties rather than many separate ones.

There are many elements to a buy-to-let portfolio mortgage, from registering as a limited company to tax rules, which your broker can help talk you through and provide support and understanding.

Get matched with a broker who specialises in second mortgages

Understanding the various criteria for a second mortgage can be daunting and confusing. With so many options and rules, it can be off-putting if you’re unsure whether you even qualify for one.

This is where the mortgage brokers we work with come in. We carefully match you with a second mortgage specialist so they can provide support as well as find the best deals out there for you. They understand the market, the lenders, the criteria, and all of those challenges you may come up against.

It’s easy to get started. Simply call 0808 189 0463 or make an enquiry online to get a free, no-obligation initial introduction with a second mortgage broker who will be happy to help you.

FAQs

Can I use two different lenders for two different mortgages?

Yes, and it is always best to shop around for the best deal available to you at the time. You won’t be penalised for using two different lenders.

Are there alternatives to a second mortgage?

Yes. If you don’t think a second mortgage is right for you, you could investigate remortgaging, a personal loan or getting an advance on your mortgage instead.

What other costs could be involved with buying a second property?

In addition to your deposit and upfront fees (and depending on its purpose), other costs to be mindful of would include:

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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