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Buying your second home? Getting a mortgage might be trickier than you remember

It’s not just first-time buyers who face the hurdle of affordability tests when applying for a mortgage.

If you’re a ‘second stepper’, saving for a deposit was probably the biggest challenge you faced when buying your first home.

Now rising house prices are motivating first-time owners to use the extra equity to make a move to a bigger or better home.

Almost half are thinking of selling up and moving to a new property thanks to record low rates on mortgages, according to a report today by Lloyds Bank.

But rule changes last year mean even with a decent deposit, anyone wanting to get a new mortgage now has to prove they can afford monthly payments – both now and in the future.

If you’re planning on buying your second home, these are the three factors the mortgage provider will use to help it decide what to offer.

Your income

You’ll need to provide bank statements and pay slips to prove how much you earn. Don’t forget to include any extra money you receive such as bonuses, benefits, investments or pensions.

Your outgoings

This is an area you may not have had to worry about when you bought your first home. The lender will want to see information about any loans or credit card debts, how much you spend on bills and insurance, plus an estimate of your day-to-day expenses. This could include what you spend on clothes, going out or childcare.

How you’ll cope if things change

Your life at the moment might seem pretty stable, and your finances consistent from month to month.

However, the mortgage lender now needs to stress test to see how you’d cope if things change. This includes things like a rise in interest rates, losing your job and even having a baby.

Building up a savings buffer could help here.

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