A Retreat to Relax. Making Your Second Home More Than Just a Fantasy


shutters-669296_640It can be a very satisfying feeling packing the car in preparation to head off to your second home for a few days away, and there are many places where it would be nice to have a place you can call home as well as your main residence somewhere else.

Instructing your conveyancing solicitors to help you purchase the property is part of turning your dream into a reality, but if you think that a second home is a bit of fantasy that you might not be able to fulfil, there are some potential ways to actually make it happen.

Get a handle on the costs

Owning a second property comes at a price. It is not just the purchase price that you have to think about, there are the ongoing costs and expenses of maintaining a second home, such as paying Council Tax, which is not discounted in the way that it used to be.

It is not a case of putting a dampener on the idea from the word go, it is a more a case of preparing yourself financially for the long term commitment of running another property, as well as the prospect of enjoying living there a certain times of the year.

Things like insurance costs can be higher, as the property may well be empty for long periods. If you plan to rent it out, the insurance premiums you pay will also reflect this added risk, so take care to do all of the sums and get a handle on the costs, so you know how much you can afford.

Crunching the numbers

Affordability is relevant to your income and outgoings. Do take a look at your debt-to-income ratio as it currently stands, as this will give you a clear picture of what you can afford to commit towards making your second home a reality.

As a general rule, in order to be comfortable and afford the mortgage payments on both properties (if you are still paying a mortgage on your main home) You probably want to get to a number that does not exceed more than 40% of your monthly gross income.

If those numbers work for your finances, then it may well be that a second home is a definite possibility.

Paying for your second home

There is no doubt that if you can gather enough cash together to buy your second home outright without the need for a mortgage, this is often the best possible option.

If you do not have enough cash available to be able to buy another property outright, there are a number of different options to consider, that may help you to get the funds you need.

If you have built up some substantial equity in your main residence or have cleared the mortgage, it might work out easier to re-finance your existing home in order to raise enough cash to buy the second home, rather than trying to raise a separate mortgage for it.

Lenders will apply sensible restrictions on the amount you can borrow so that there is still plenty of equity in your main home after the loan is taken out, so you can soon work out if there is enough available to pursue this option.

You can also use some of your savings as a deposit and then take out a loan to buy a second home, subject to meeting the lending criteria of course.

Whichever way you approach it, when you do the numbers, you may well find that a second home is not as fanciful a dream as you once envisaged.

Lewis Cook is a business man who enjoys writing articles whenever he gets a change. Though he mostly writes about business topics, he is also knowledgeable when it comes to investing and property, and shares his insights into these topics online too.

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