A second home can be two things; a vacation and home away from home, or an investment. You can rent out your second home when you’re not staying there and make money from it so surely it’s a great choice? There are great places around the UK that are becoming more popular destinations such as apartments North Wales.
Before you get ahead of yourself, there are a number of things you need to think about before buying a second property. This includes things such as affordability, taxes and the purpose for the home.
- Is it affordable?
Firstly, make sure you can afford to get a second home and a second mortgage. Ideally, you want to have paid off your first mortgage, or have found it easy to handle and made consistent payments.
A second mortgage usually has slightly higher interest rates than the first. You will need to prove to your bank that you will be able to manage both.
- Second residence or rental property?
The tax implications are massively different when you’re renting out your first home, rather than keeping both residencies for yourself. It’s best to check with your local authorities to see what applies in your area.
If you choose to rent your property out as a holiday home you could be subject to beneficial tax laws as it would be considered a trading business.
- Get in contact with an estate agent.
A good estate agent in your area could most likely help and advise you on some elements of securing your second home. They might be able to calculate an estimate on what your mortgage payments could be.
On top of this, an estate agent can offer you insight into things like how safe the area is, school regions, amenities, average house prices, and other things you probably wouldn’t have thought of.
- Choose your down payments and terms carefully.
Most commonly chosen is the fixed-rate mortgage, where you can make payments over 30 or 15 years – though the 15 years option comes with lower interest rates.
Keep in mind that qualifying for your second mortgage might require you to refinance your original mortgage so that your monthly payments on your first home is reduced.
- Marketing your second home as a holiday home can be easy.
Thankfully, marketing your second home for holiday goers can be a simple process thanks to sites such as Airbnb and Homeaway. You only need to put some pictures on, fill in some details and you’re ready to get started!
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