Even if you want to buy a second home, you can take out a mortgage. In this article you can read everything about how buying a second home works and how you can get a mortgage for it.
Buy a second home: mortgage for a second home.
If you buy a second home and take out the mortgage for it, the mortgage for your first home will expire otherwise. Whether the house is intended for rental or to enjoy it yourself. You can finance a second home in two ways:
- Use equity: a smart idea is to increase the mortgage on your owner-occupied home. This can then be used to buy a second home. One option is to supplement your own money with this. This option is only available if you have equity on your home;
- Conclude an investment mortgage: with a real estate mortgage or buy-to-let mortgage you can purchase and finance additional real estate. Not every lender has this product available. As a result, there is less choice of banks.
The rules for the maximal mortgage are different than for the first mortgage. A calculate a rental mortgage is really different and various factors are taken into account, for example whether there is of rental income and what the market value is in rented condition. The interest rates are a lot higher. At Bliss we can help you finance a second home. We take into account your wishes, such as the personal use or rental of the property.
Financing my second home with equity
Do you currently have equity in your own home? Then you may be able to increase your mortgage and finance your second home in this way. Due to the tax background, since 2013 mortgages have to be repaid in full in 30 years. If you are going to increase the mortgage for financing a second home, this is not mandatory. Many lenders allow 50% of the market value to be financed with an interest-only mortgage. Sometimes this percentage is even slightly higher than fifty percent. This can make a huge difference in monthly payments. The consequences of a second mortgage for a second home means that the mortgage interest is not tax deductible from the taxable income in the income tax return. This means that both the value of the home and the mortgage loan are placed in box 3.
Financing my second home with an investment mortgage
If you have no or insufficient equity, a real estate mortgage may be interesting. An investment mortgage can also supplement your equity and savings. With such a real estate mortgage it is possible to take out a mortgage with the aim of buying a second home. It is important to take a number of things into account.
1. Second home for rental or a holiday home?
It is important to know what you are going to use the property for. Buying a second home can have different purposes. This is certainly important for the mortgage. Lenders have different rules for different use of a second home. Are you going to buy a house to rent out or is it for your own use, i.e. a holiday home, also known as a holiday home? There are other possibilities and limitations for both situations. When you rent out the house, you may include the rental income when calculating the mortgage.
Another factor is that the house must also be appraised. A lender of a second home mortgage would also like to know the value of the home. The valuation report is often a lot more expensive. The appraiser has much more work to calculate the so-called market value in rented condition. This market value is a lot less than the normal market value. Unfortunately, a mortgage is not always possible for a holiday home. Banks are hesitant about financing a holiday home. Financing a chalet or bungalow in a park is not something many mortgage lenders are interested in.
2. Own money is almost always needed
If you want to buy a second home, in addition to taking out a mortgage, you also need to contribute a part of your own money. Paying for part of the house yourself is therefore almost always necessary with a mortgage for a second (or perhaps third) house. Most lenders allow you to finance up to 70% of the market value. Some banks have the option to provide 80%-90% mortgage. There will therefore almost always be a part left over that you have to invest yourself. One option is to use the extra equity of your own home and take out a mortgage for this. This does mean that the maximum mortgage is affected. They are actually communicating vessels. It is good to get advice about this in advance.
3. Flexibility in mortgage form
A second mortgage does not fall into box 1 of the tax system, but fits into box 3. Unfortunately, the interest is not tax deductible when filing a tax return. This means that you are free and flexible to take out a second mortgage, for example partly in the form of an interest-only mortgage. Most lenders allow you to finance 50% of the home interest-free. Some providers even more. By financing a large part interest-free, this saves a lot in monthly costs.
4. Which mortgage lenders finance a second mortgage?
Currently, not every bank, insurer or managing party has the option of offering a second mortgage. The following parties can currently finance a second home ABN-AMRO, BLG Wonen, ING, Rabobank. For a second home you can also take out a buy-to-let mortgage with Nationale-Nederlanden.
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