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Owning a second property used to be the preserve of the very wealthy. This is no longer the case and the prospect of purchasing a second property, for whatever reason, is becoming a reality for more and more people.
As well as being done for practical purposes – such as purchasing a holiday home by the sea or an apartment close to the city as a weekday dwelling for the main earner of the family – purchasing a second property can also be carried out as an investment.
Funding the purchase of a second property can be done in numerous ways. For those people that do not have the necessary cash at their disposal, there are options such as releasing equity in your main property by remortgaging (providing, of course, that you have a sufficient amount of equity available in that property), or applying for a new mortgage.
When assessing your request to remortgage, or take out a new mortgage, your lender will consider your reasons for wishing to purchase a second property and your ability to repay the amount borrowed. If you are purchasing a second property with the intention of renting it out to produce additional income, your mortgage lender will take this into account when assessing the amount you are able to borrow. In this case, you will need to apply for a ‘buy to let’ mortgage. Alternatively, if the property you are wishing to purchase will not be providing any source of income, you will need to demonstrate how you will be able to repay the mortgage.
The reasons that people choose to buy a second home are numerous and varied. It should be undertaken with careful forethought, detailed financial planning and sound legal advice from experienced, specialist lawyers.