Buying A Second Home: All You Need To Know

There is a lot of advice out there about buying your first home, but what about when you're looking at buying a second home?

Although you have the advantage of having been through the situation already, the truth is that there is still a lot to know that you are going to have to think about, and lots to consider when you buy a second home.

Let’s take a look at some of the things you might need to bear in mind as you go through the process of buying a second home.

There Are Tax Differences

You should be aware that there are usually differences in how much tax you will be expected to pay when you are buying a second home, compared to your primary residence. In most parts of the world, you are going to pay more than you do for your first property.

With stamp duty for instance, you’ll be paying considerably more than you would have done for the first property. So it’s a good idea to be ready and prepared for that, and to ensure that you are doing all you can to make sure you can afford it.

You May Need A Bridging Loan

This is a situation where you might find it helpful to have something known as a bridging loan. Essentially this is a type of loan that you take out in the interim, so it would be applicable if you were going to buy a second home and then sell your first.

In that case, you have the funds tied up in your primary home, so you’ll find a bridging loan helpful for that. If you are considering this, use a bridging loan calculator to find out exactly what you need to be aware of and how much you can afford to borrow.

. . .And A Large Deposit

Again, this is something that is a little different to buying a first home. If you are buying a second home, you’ll find that it’s really important to make sure that you have enough of a deposit in place.

You will need considerably more than you would for a first home – usually somewhere in the region of 25% of the value of the property. So it may be that you need to consider that and that you need to save up for a while before you can actually afford it. All in all, this is going to be really important to consider.

Credit Score Is Everything

You might find yourself wondering whether you need to worry about your credit score, and the answer is yes – credit score does still matter even though you have proved you can buy a home and have a mortgage previously.

In fact, sometimes people find that they need to have an even better credit score than usual. So all in all, it’s important to make sure that you are happy with your credit score and you feel it is in a good place before you buy your second home.