Purchasing A Second Property: Key Things To Know
Are you in the market for a second property? It’s become a popular trend in recent years, with an estimated 10% of Brits owning a second property in 2022. That figure is likely to continue rising in the coming years, with the continuous rise in homebuyers approaching the property market.
So, what differences come with purchasing a property the second time around?
The procedure will still be the same. You’ll search for properties just like other homebuyers, attend house viewings, place various offers, apply for mortgages and complete the conveyancing process as usual. However, second properties can be used in various ways by homebuyers, meaning the mortgage you apply for will need to suit specific requirements.
Different Mortgage types:
A residential mortgage applies to homebuyers who plan on spending a certain amount of time between both properties they own. You’ll have to make sure you’re in a good financial position to prove you’re capable of paying both monthly mortgage payments on both properties at the same time.
Buy-to-let mortgages are for people who want to rent their second property to someone else and collect income as a landlord. If renting the second property out to tenants is something you’re considering, you’ll first need to obtain a buy-to-let mortgage.
This type of mortgage is for people who need to rent out their current property in order to secure their second property. This type of mortgage is sometimes considered and used for those who are struggling to sell their first home, helping towards deposit payments in the process.
Stamp duty Land Tax Costs
When homebuyers complete a second property purchase, they will need to consider the stamp duty costs that come with it. Stamp Duty rates go up in line with the value of the property you’re purchasing, as well as paying the standard rate of the Stamp Duty. This applies even if you’re not planning on living in the property.
It is vital that you do your research and educate yourself on the rates and costs of the Stamp Duty before you go ahead with a second property purchase.
Whether this is a second property for you to live in, or it’s seen as an investment opportunity, the location is one of the most important factors to consider. The property is going to be all the more valuable if you do your research and pick an area that is known for bringing value.
Advantages of owning a second property:
Helps increase your financial security
Probably the number one advantage of owning a second property is the financial security it brings. You can immediately start receiving an income on a regular basis, should you consider renting it out, either on a short-term or long-term basis, which allows you to then setup a lease option. Renting means you can secure a fixed fee income, which tends to be beneficial to those who are either already retired or soon to be going into retirement.
Expands your property portfolio
Securing the keys to a second property gives you the freedom to travel whenever you want without having the worry of paying holiday prices or for a hotel to stay in. If you were to use the second property as a holiday home, it gives you the chance to build up a relationship within a new community its based in.
It also gives you the privileges of choosing whether you stay in your current home for the weekend or travel to your second home, as well as the opportunity of raising some income during the time you’re not using the holiday home by renting it out to family, friends, or holiday goers for a set fee.
Help build retirement fund
One other advantage of a second property, and a reason that it’s popular amongst homebuyers is that it can help build a retirement fund for the future. If you decide to buy-to-let the property, instead of having it as a holiday home, you’re immediately receiving an income which you can save for the long-term.
How we can help with your next property purchase:
If you’re giving serious consideration of adding a second property to your portfolio, GWlegal can help!
We have been providing exciting deals and conveyancing services for well over three decades. Our legal experts are ready and waiting to get you started today!
Whether you require more information or questions and queries answering first, don’t hesitate to contact our experienced legal team who are more than happy to help.
Other property reads
- Ways To Show Your Home Some Love
- Local Land Charges - Your Questions Answered
- Buying A Property With Cash: What Being A Cash Buyer Means
- Tips To Help You Buy A House
- Benefits Of Being A Chain Free Buyer
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Content correct at time of publication.