5 min read
Interested in buying a second home? Explore our guide to find out more about the process and the costs of buying a second property.
Deputy Head of Conveyancing & Licensed Conveyancer.
Published April 16th 2024
Updated on April 15th 2025
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The idea of buying a second home can be appealing, whether you want it for weekend getaways, for potential rental income or to invest in your future. However, before you go ahead, careful consideration should be given to whether it’s right for you. Here we explore everything you need to know about buying a second property.
In this article:
When we talk about buying a second home, there are a couple of different types of ownership for your second property which can affect some of your options. So, first of all, you’ll need to decide exactly what you’ll be using the property for, as it does affect things such as deposit amount needed, mortgage type and insurance.
If the second property’s primary use is for you, for whatever reason, for example a holiday home, or a pad close to your office to use during the working week, this would be classed as a second residence or holiday home.
If you plan to buy a second property to rent out, either all the time or part of the year (over 210 days), this would be classed as a buy-to-let or holiday-let property.
The process of buying a second home is similar to buying a standard property, however, as you’re stretching yourself further financially even more due diligence should be put into the planning process so that you completely understand the process.
Before you find a house to buy, you should first of all assess your financial situation and work out how the second property will fit into your long-term goals. You may have several options to finance the purchase and so it’s important to consider them all.
For example, you may be thinking of buying the property with cash, remortgaging your current home to release equity to fund the purchase, or to take out a completely new mortgage. Either way, it’s best to seek help from a financial adviser so they can help discuss all the options available to you.
Once you’ve decided how the purchase will be funded and you have chosen a property, you’ll need to instruct a conveyancer to take you through the conveyancing process of transferring ownership to you. Like a standard purchase, your conveyancer will order any required conveyancing searches, communicate with the sellers solicitor and calculate the amount of stamp duty required.
Watch our short video to learn more about the conveyancing process when buying.
Thinking of buying a second home? Get a personalised quote now to see how much the conveyancing may cost.
Costs are important to factor in with second homes, as you’ll be adding to costs you already have to pay out for. Find below a list of costs associated with second homes
You’ll need a conveyancer to help you through the process of buying your second property. Find out more about the costs of buying a house and conveyancing fees in our articles.
Purchasing a second home comes with notable tax obligations that you must consider. Here are the key areas where you'll see these impacts:
Stamp duty is more expensive on additional properties and can be one of the biggest costs to incur when buying a second property. Find out an estimate charge for stamp duty using our stamp duty calculator or view the rates in the table below.
| Proportion of property value | Rate for additional properties | ||
|---|---|---|---|
| Up to £125,000 | 5% | ||
| £125,001 to £250,000 | 7% | ||
| £250,001 to £925,000 | 10% | ||
| £925,001 to £1.5 million | 15% | ||
| Over £1.5 million | 17% |
Stamp Duty Calculator 2025
The stamp duty calculator gives an indication of stamp duty liability for freehold residential property from April 2025.
If you decide to sell your second home you could become subject to capital gains tax on any increase in its value. If you're in the basic rate tax bracket, you'll pay an 18% tax on the profits, unless the gain falls below the personal capital gains allowance (which is currently £12,000).
Your second property will generally incur council tax obligations unless you qualify for any exemptions or discounts. These can vary, so check with your local council for specifics.
Bills and maintenance – you’ll have to factor in ongoing upkeep costs.
Council tax – you will have to pay council tax on your second home, which is calculated based on the property’s value and location. Some council’s do offer a discount for second or holiday homes though.
Insurance – you will need to get special home insurance depending on whether you’re letting the property out, using it as a rental holiday home, or using it as a holiday home for yourself, so be sure to look into what insurance you will need to get.
Management fees – if you’re purchasing a buy-to-let you may pay a management fee to a company to manage the tenants.
Mortgage deposit – your mortgage deposit it likely going to have to be a bigger lump sum than a standard house purchase. With buy-to-let mortgages it’s likely you’ll need a deposit of 25%.
Monthly payments – mortgages for second homes tend to have a higher interest rate and so your monthly repayments will be more. With buy-to-let mortgages you’ll also need to show that your monthly rental income will be a certain percentage over the monthly payments to ensure it is affordable.
Obtaining a mortgage for a second home is typically more challenging than for a primary residence. Lenders assess these applications with an added layer of scrutiny due to several factors.
Firstly, financial obligations play an important role. If you already have a mortgage for your main home, lenders may see this as a significant financial commitment. They want to ensure you can manage additional debt comfortably.
Higher deposits: To reduce their risk, lenders often require a larger down payment for a second home. This ensures you have substantial investment in the property and are less likely to default on your mortgage payments.
Income verification: Proof of a robust income is mandatory. Lenders need assurance that you can handle two mortgage payments, maintaining financial stability across both properties.
Moreover, they take into account not just your current earnings, but also your age and how long you can continue earning at this level. This holistic view helps them ascertain your long-term financial viability.
The amount of deposit you need for a second home depends on whether it’s a second residence or a buy-to-let. This is because the different types of ownership require a different type of mortgage, each with different deposit amounts.
For a residential property, you’ll likely need at least a 10% or 15% deposit, especially if you’re using a second mortgage to help purchase the property. If you’re buying a house as a buy-to-let investment, the deposit will need to be higher, typically at least 25% of the property value.
Unless you are a cash buyer you will need to apply for a second home mortgage when purchasing a second home. As we discussed, these mortgages come with more stringent financial checks, as lenders need to be confident that you can cope with payments on two properties.
Depending on how you plan to use the second property, you might need a specialised mortgage:
Buy to Let mortgage: Ideal if you're renting the property out long-term.
Holiday Let mortgage: Suitable if you're planning short-term lets to holiday-makers.
Understanding these options will help you to choose the right mortgage type for your second home, aligning with your financial goals and the intended property use.
This is a question only you can answer. You’ll need to factor in your financial situation and goals as well as the current property market and any predictions for the future. For example, are you looking solely for a retreat for yourself, do you want it to be an investment, are you willing to do any renovations now or in the future, do you want it to have rental potential?
You should carefully weigh out the pros, cons and costs before making a decision.
A dedicated holiday home to enjoy & relax in – if you’re purchasing a second home for yourself, you’ll have the peace of mind that whenever you want to get away from daily life, you can.
Potential income stream – if you’re planning on renting a second property out, you’ll potentially have a monthly income stream to offset the costs and potentially turn a profit.
Potential investment for the future – properties can increase in value, especially if kept for a long period of time (although this shouldn’t be relied upon)
Financial strain – you’ll have double your monthly bills which may put strain on you financially, especially if you were hoping the income would offset the outgoing costs.
Additional responsibilities – you’ll have two properties to look after, including regular maintenance and the sorting of life admin.
Market conditions – the market can fluctuate, and property values can decrease, and so if you are purchasing as an investment, it unfortunately cannot be guaranteed.
Capital gains tax – when you come to sell the property, you might be liable to pay capital gains tax if you have made a profit over a certain amount. If you’re looking to pass the additional home down as inheritance, there may also be inheritance tax to pay.
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