0808 189 0463

      Menu

        0808 189 0463

        Updated: April 17, 2024

        Second Home Mortgage Deposits

        Not sure how much deposit you'll need for a second home? Find out exactly how much you need and all the other requirements in our in-depth guide!

        Calculate my Loan-to-Value Ratio

        No impact on your credit score

        If you’re considering getting a mortgage to buy a second home, whilst there’s no set rules amongst lenders, it’s likely you’ll need to have a larger deposit than you did for your main residence.

        This guide will give you a better understanding of how much deposit you may need, how this amount could affect your interest rate and where to look for help securing the best deals available.

        How much deposit do you need for a second home?

        On average you will be required to put down about 25-30% deposit, although there are a number of criteria that affect this general loan-to-value calculation (see below).

        From a lender’s perspective, the larger the debt in relation to the property’s value, the bigger the risk, therefore, it’s often the case that borrowers will be asked to pay a larger loan-to-value ratio on a second home mortgage.

        However, this loan calculation is from lenders who specify a standard loan-to-value criteria for second mortgage applications, but many don’t specify and have open-ended criteria, instead making decisions on a case-by-case basis.

        Is it possible to get approved with less than 25%?

        Yes, it is. There are no hard and fast rules, and there are lenders out there who will be willing to take a wider view on eligibility when applying for a second mortgage.

        This is where working with an experienced broker would be beneficial, as they will understand which direction to go in when it comes to more flexible lenders and broader criteria that might suit your individual circumstances.

        Get Started with a Broker

        Maximise your chance of approval with specialist advice from a mortgage expert.

        Do deposit amounts impact available rates?

        Yes, it’s definitely a factor. Securing the highest loan-to-value available will come at a price and that’s typically the interest rates that will accompany these types of deals.

        As with all kinds of different mortgages, the more money you put down as a deposit (therefore borrowing less), you will be in a stronger position to not only secure a mortgage but also benefit from the better rates.

        For example, if you contribute a 40% deposit (or more) to the buying of your second home, you should get access to the best deals, therefore the debt itself will be cheaper to pay back each month and you will pay less interest over the mortgage term.

        What affects the amount required?

        There are a number of factors that will affect what percentage is required and it’s not as simple as choosing your own preferred deposit ratio when buying a second home:

        • Credit history: The cleaner your credit report, the lower the risk, according to mortgage lenders. If they view your financial behaviour in the past as a concern, you might be expected to offset that risk by putting down a larger deposit. How you have coped and conducted your payments in your current mortgage term will also be considered.
        • Affordability: All lenders will want to be certain you can comfortably afford the additional mortgage repayments throughout the term. The lower your current debt-to-income ratio is, the better chance you have of securing the borrowing you need.
        • Equity in your current home: If you have significant equity already in your first home because you’ve paid off a good portion of the mortgage, it is sometimes possible to combine the loan-to-value borrowing ratio with your first home, which could bring down the deposit required in your potential second home.
        • Type of mortgage: For example, a buy-to-let mortgage might require a higher deposit than a residential one.
        • Type of property: Any benefits you might have gained from a strong eligibility might still be undone if your property type is considered risky.

        Work out the loan-to-value (LTV) for your second home

        Use our calculator below to see how much the loan-to-value would be on the second home you’re looking to buy.

        A higher LTV may reduce the number of lenders willing to consider your application but an experienced broker would be able to help identify the ones who can help, saving you a lot of time trying to search by yourself.

        calculator icon

        LTV Calculator

        This calculator will tell you what your loan-to-value (LTV) ratio is, based on the property's value, your deposit/equity and the amount you're borrowing.


        Enter an amount in pound sterling
        £
        Property value minus your deposit/equity
        £
        Loan amount must be less than property value

        Your LTV is

        This means that most mortgage providers will consider your deposit amount to be more than satisfactory, but speaking to a broker is still recommended to ensure you get the best deal.

        This means you’re likely to meet the deposit requirements at most lenders, but since many reserve their best rates for those with higher deposits, speaking to a broker is recommended.

        Many mainstream mortgage providers would consider this high and be reluctant to lend. Applying through a mortgage broker may be necessary to find a specialist low deposit mortgage lender.

        LTVs have a direct impact on the rates available to you - speak to a mortgage broker and find out how to get the best deal based on your ratio.

        Our Broker-Matching Service Guaranteed!

        We want you to have complete confidence in our service, and get the best chance of securing your mortgage. We guarantee to get your mortgage approved where others can’t – or we’ll give you £100*

        Learn More

        How a broker can make the difference

        With an understanding of the marketplace and access to the entire lender spectrum, working with a broker when applying for a second home mortgage could make an enormous difference when it comes to what deposit you’ll have to pay and the interest rate on your mortgage.

        Having someone knowledgeable and trustworthy working on your behalf when going through the complex process will provide peace of mind and could save you money in the long-term.

        The brokers we work with will know which lenders are likely to require a higher deposit than others, where your criteria fits, and where to go with the deposit you have available.

        If you get in touch we will arrange for a specialist to contact you directly.

        What is the impact on stamp duty?

        As well as potentially paying a bigger deposit, stamp duty is also another large outlay that is hiked for second homes, so you should consider this sum carefully too.

        Stamp duty on second properties is set at 3% higher than first homes as a result of the UK Government’s efforts to help first-time buyers onto the property ladder.

        Use our calculator below to work out how much stamp duty you will have to pay on your second home.

        calculator icon

        Stamp Duty Calculator

        This calculator can tell you how much Stamp Duty Land Tax you will need to pay on your property purchase, whether you're a first-time buyer, a home-mover or in the market for an investment property.

        Enter an amount in pound sterling
        £

        Your stamp duty to pay is:

        Your effective tax rate is

        Now that you've worked out how much stamp duty is payable, it's a good idea to talk to a broker about your mortgage options. They can help you make sure you aren't paying over the odds with all costs and fees factored in.

        Get matched with a broker who can guide you through

        There are many things to consider when applying for a second home mortgage. Working with a specialist can point you in the right direction and make things clearer.

        We work with second home mortgage experts who give independent and bespoke advice and guidance.

        Call us today on 0808 189 0463 or make an enquiry for a free initial consultation to find out how the process might benefit you.

        Get Started with a Broker

        Maximise your chance of approval with specialist advice from a mortgage expert.

        FAQs

        Realistically, it will be difficult to get one with such a low sum, however, as already outlined in this guide, there are possibilities depending on your circumstances.

        If you have paid off your first mortgage, for example, could put you in a good position for such a low deposit being accepted.

        No, you can only have one primary residence, however you may be able to choose which one to nominate as your primary address.

        This must be approved by HMRC though, and it would be wise to take proper advice on this if you intend to save on stamp duty this way.

        Ask A Quick Question

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

        1 of 3
        £
        £
        £
        2 of 3
        3 of 3 Send!

        Pete Mugleston

        Mortgage Expert, MD

        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!

        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 as well as any of our own are fully qualified to provide mortgage advice and work only for firms who 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.