How to buy a second property using equity

Choosing the right mortgage for you, whether that’s for the first time, a remortgage or a buy-to-let can seem overwhelming – so at Private Wealth Mortgages, we guide you through the entire process, finding the best deal for your circumstances.

Adept at navigating the ever-changing mortgage market, our friendly and qualified advisors have over 30 years of combined experience.

At Private Wealth Mortgages, we often get asked ‘can I remortgage to buy a second property?’ or ‘can I use equity to buy a second home?  In fact, every year thousands of people in the UK decide to buy a second home either as an investment or a place they can use as a holiday home. The following questions and answers will help you decide whether buying a second home using equity from your existing home is the right move for you as well as answering – how does equity work when buying a second home:

How much equity do you have?

One of the first steps towards buying a second home using equity in your property is to find out how much money you have invested in your existing home to be able to answer the question ‘how much do I have to put down for a second home?’ This can be calculated approximately by subtracting the outstanding mortgage amount from the estimated value of the property. Once you know the amount of equity in your property, you can begin to consider the type and size of another property you might like to buy.  Please bear in mind you will not be able to draw on the full amount of equity in your home unless the property is sold.

It’s important to speak with a mortgage adviser to clarify how much of this equity is available to you and that your plans ensure that you release cash from your home safely and securely. At Private Wealth Mortgages, we are authorised and regulated by the Financial Conduct Authority (FCA). We are also members of the Equity Release Council (ERC), the industry body for equity release mortgages, so you are in safe hands with us.

Are you an ‘older’ borrower or retired?
It’s important to consider there may be limitations on how much you can borrow in order to purchase a second property depending on your age. For example, some lenders may have a restriction on providing mortgages to people aged 70 or above. But this will depend on your individual circumstances and your ability to repay the mortgage. There are now more and more specialist mortgages designed with the older borrower in mind which might be worth considering. Our retirement section has lots of information about these, alternatively give one of our experienced mortgage advisors a call.

What type of mortgage do you need?

If you’re planning to become a landlord and rent your property out to tenants, you will need to apply for a buy-to-let mortgage. Banks and building societies will consider different factors for a buy-to-let mortgage, including the rental market in the area you buy and the expected rental income. In addition, they will assess your own personal income and circumstances including your current mortgage and any other regular financial commitments.

If you’re planning to live in both your existing home and your second property at different times, you can apply for a second residential mortgage and you may ask the question ‘how much mortgage can I afford on a second home?‘ You may wish to release equity from your existing property to fund the deposit on your new property, which may mean applying for a mortgage on both properties.

There are numerous mortgage options on the market for you to choose from, but it’s important that you select the best rate, term and repayments for your own individual circumstances. At Private Wealth Mortgages we aim to get a full understanding of our client’s financial situation as well as the goals or aspirations they have for the future. This helps us to present the most appropriate selection of mortgages to help you make the best decision.

How much will stamp duty cost?

Property purchase is subject to stamp duty, otherwise known as tax. If you already have a residential  property that you are retaining, you will typically pay 3% in addition to the existing stamp duty rate, but this may fluctuate depending on government rules and regulations. Stamp duty varies depending on the value of the property you are buying, so we recommend you ask for professional advice on the stamp duty charge before committing to any large property investment.


At Private Wealth Mortgages, we have over 30 years of combined experience in mortgagesremortgagesequity release and financial planning. We also work with trusted partners such as solicitors, accountants and financial advisors.

With us, it’s less about a list of lenders and more about finding the right fit for your life. We find that by getting to know you, listening to any concerns you may have, understanding your current financial situation and considering how that might change in the future.

We are proud to say that our clients receive a full mortgage strategy that helps them live more securely and comfortably both now and in the future. Skilled at navigating the mortgage market, we have years of experience helping a wide range of people, regardless of their income, profession or credit history. We make a promise to keep things simple – ensuring clients are continually up to date with information. You will have a dedicated administration team member assigned to you, who can assist with any questions you have and who can take care of as much of the paperwork as possible.

What’s more, we offer an initial consultation with a review of your current circumstances and income levels for free and with no-obligation. Give us a call on 01403 270006 and one of our friendly, impartial and experienced mortgage advisors will be happy to help.

Call our expert mortgage advisers today

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