The second time home buyer's guide

Whether you’re considering a holiday home for escaping the city, or a buy-to-let to generate added income, we’ve got some helpful advice about mortgages and Stamp Duty, plus other tips to avoid potential pitfalls and make the home buying process as painless as possible.

A couple buying their second home

COVID-19 (Coronavirus) - what you need to know about buying

If you’re considering buying a second home, it’s important to stay on top of the latest government guidelines on viewings, and other updates that may impact what you’re allowed to do.

If your income is being impacted by the crisis, it’s important to take steps to protect your credit score. That’s especially true if you’re planning on a second home purchase.

Buying a holiday home

The mortgage you get will depend on what you’re planning to do with your second home. So you’ll need to decide exactly what you’re after before you apply for a mortgage. If you’re looking for a holiday home for yourself and your family, and have no plans to rent it out, you can apply for a normal mortgage.

However, if you intend to rent it out on a regular basis, you’ll need to apply for a holiday-let mortgage. There are fewer companies offering these kinds of mortgages. However, renting out your holiday house is a good way to offset some of the cost of a holiday retreat. A holiday-let mortgage also offers some surprising tax benefits. But if you’re considering using it for Airbnb rentals, you’ll need to let the lender know in advance. So it pays to research your options before jumping into buying a holiday home.

Buying a rental property

Using a second home as an investment property can be a smart way to generate income or pay off a home that you ultimately want to move into. Either way, you’ll need a buy-to-let mortgage. These usually involve a deposit of at least 25%, with higher interest rates than with standard mortgages. That’s to offset the higher risks associated with having tenants. Check out our mortgage guide for the full picture of your mortgage options.

What you’ll need to get a second mortgage

It is possible to borrow against your first home in order to buy a second home – even if you’re still repaying your first mortgage. Depending on your particular case, you could get as much as 85% of your home’s value. Here’s what you’ll need to qualify:

  • a good credit score is crucial. The better it is, the higher your chances of getting the second mortgage you need. So it’s important to know your credit score. Here’s how to check your credit score and find out what is a good or average credit score
  • a larger deposit is usually required for a second home than what you paid on your first home
  • a suitable income to provide assurance that you can manage payments on both mortgages

If you’re thinking of a second mortgage to finance your second home, taking steps to improve your credit score is a good way to improve your chances. There are some practical things you can do, like budgeting, consolidating debts, and keeping credit card balances. Our Barclays Budget Planner offers a handy budget calculator and other useful tools to help. You can also find some helpful tips at Barclays money management.

Man decorating his second home


How much Stamp Duty will I have to pay?

If you’re buying a second home, you’ll need to factor it into the final amount you need to borrow. However, there are some cases where properties are exempt from Stamp Duty. This includes:

  • if the property is worth less than £40,000
  • if it moves – for example, a caravan, houseboat or mobile home
  • If you’re planning on living in your new home but don’t sell your first right away, you may be able to claim a refund if you sell your previous home in under 36 months.

Stamp Duty is calculated differently on a second home or buy-to-let. That’s true even if you’re planning to make your second home your primary residence.

So it’s important to know how it’s calculated, and how much you can expect to pay. This will depend on the value of the property.

In response to the current COVID-19 (Coronavirus) crisis, the government has changed the Stamp Duty on the purchase of a residential property between 8 July 2020 to 31 March 2021. These rates apply whether you’re buying your first home or have owned property before:

  • 0% for properties up to £500,000
  • 5% for the portion between £500,001 and £925,000
  • 10% for the portion between £925,001 and £1.5 million
  • 12% for portion above £1.5 million.
  • So if you’re buying a property of £1 million, you’ll have to pay the following Stamp Duty:
  • 0% for the first £500,000 = £0
  • 5% on the next £424,999 = £21,250
  • 10% on the remaining 74,999 = £7,500
  • Total Stamp Duty tax = £38,750

For more details about these temporary Stamp Duty rates, check out the government announcement. General information about Stamp Duty rates and rules can be found on the government website. And to get up to speed on your various mortgage options, have a look at our handy mortgage guide.

What's next?

If you’re thinking of buying a second home and want to check your credit score, it’s easy. 

How to check your credit score