Second home mortgages can be a very complicated issue, especially in the current financial climate. People need a second home mortgage for a number of different reasons. The most common reason for second home mortgages is to finance properties which have been bought with the view of letting it out to a tenant, this type of mortgage can also be called a buy to let mortgage or holiday let mortgage. Renting out a property can lead to long term financial gains in the form of receiving monthly rent from the tenant and a large profit if the decision is made to sell the property in the future to a rise in the property’s price. This is a great way for people to invest and secure their financial future.
Second home mortgages are also popularly used for the purchase of a holiday home. Holiday home’s are very popular in the UK, especially with people who live busy lifestyles in hectic cities, a holiday home in the country is their perfect getaway to the countryside in order to relax on the weekends or on their time off from work. These holiday homes can also be rented out when not needed to raise income from rental, they can also be sold in the future for a possible profit. Other reasons for a second home mortgage would be to purchase a house for a member of the family such as children.
When applying for a second home mortgage, the decision of the lender to grant a mortgage will be dependant on numerous factors. For their best interests, they must be sure that the borrower will be able to afford the repayments on the second home mortgage, which can be decided by considering any current liabilities they have in their name. These liabilities could include other mortgages, loans and even their credit rating will be taken into consideration.
If you are purchasing a property with the intention of letting it out to a tenant, it is advisable to carry out research in order to find out if it is likely that the property will increase in value, factors such as the area and local development should be assessed. Also you should consider the likelihood of finding tenant, it is unadvisable to purchase if the likelihood is low. Purchasing a second home however can be a great investment, whether it be as a holiday home, buy to let or for general investments such as purchasing for your children, high profits are possible as long as extensive research and consideration has been carried out.