Everything you need to know about buying a second home
Considering purchasing a second home? You’re not alone. In fact, there’s been a significant increase in the number of people buying a second home in the last decade. It’s important to figure out exactly what you want to achieve by owning a second home. From additional income to a weekend and holiday home for your family to enjoy, there are a number of reasons as to why you may want to buy a second property. Figuring out how you’ll use your second home can help you make important decisions along the way. Regardless of your reasons for purchasing an additional property, it’s an undeniably exciting venture. Despite the excitement, we understand that you could be feeling a little overwhelmed too. There’s lots to figure out and get organised in order to make your dream of owning a second home become a reality.
Here at Oakheart, we have a team of property experts across Essex and Suffolk who can help you find the perfect second home and guide you through the process. We’ve compiled some useful information on things to consider and what you need to know about purchasing a second home.
Second Home Mortgages
If you’re not in the position to purchase a second home using cash, you’ll need to think about obtaining a mortgage. If you’re still paying off the mortgage on your first home, it’s more than likely that you’ll still be able to get another mortgage for a second property. You’ll just need to prove that you can afford the repayments on both mortgages. If you’re planning on renting out your second home, you’ll need to let mortgage lenders know the likely rental income. When applying for any type of loan or credit, it’s important to make sure you have a good credit score. You’ll also need a large deposit. Typically, you’ll need to put down around 25% of the value of the property.
Stamp Duty and Tax Regulations on Second Homes
If you’re purchasing a second property, it’s important to make yourself familiar with the rules surrounding stamp duty and other tax regulations including capital gains tax and council tax. The rules currently state that you’ll have to pay an extra 3% in Stamp Duty when purchasing a second home. However, it’s important to double check that this is still the same when you come to buy your second property. If you decide to sell your second home, you’ll be liable for capital gains tax. It’s also important to think about council tax too. Make sure you have thoroughly researched capital gains tax and council tax.
Can I Rent Out My Second Home?
Letting a second home is something lots of people decide to do. Depending on what suits your lifestyle best, you might decide to purchase a buy-to-let property and rent to long-term tenants. Or, you might decide to turn your second property into a holiday home. You could then enjoy the second property yourself but also generate an income on times where it would otherwise be empty. Whatever you decide, it’s important to seek advice from your mortgage broker and research into tax implications.
What is a Let-to-Buy Property?
A let-to-buy property is when you rent out your existing home and purchase a new one to live in. If you’re considering this, it’s a good idea to speak to an experienced property expert or mortgage broker. They can advise you on the best way forward and help you navigate the mortgage process.
Found your dream home in a stunning location? Purchasing a second home in an area that you love can be wonderful. This will allow you to choose when you’d like to visit your holiday home and let the property out to other tourists when you’re not using it. You may find that you need to obtain a holiday let mortgage, but your broker can talk you through the best options.
You’ll find that there’s plenty of benefits that come with buying a second property, including but not limited to, generating additional income, increasing equity in your first home and making a solid investment. However, it’s important to be aware of the costs associated with this venture.
Decided that a second property in Colchester is what you want? We have a team of property experts across Essex and Suffolk who will be more than happy to guide you through the process. You'll be pleased to know that we have a wide range of stunning properties that could be perfect for your new venture too. Get in touch with our experienced team today!