What to consider when buying a second property
There are plenty of things to consider if you’re looking to buy a second property. Stamp duty, mortgage tax relief and the impact of Brexit are just some of the impacts you will need to bear in mind when buying a second home, a holiday home or a buy-to-let this year.
Think about the location. Infrastructural changes have a direct effect with property prices as well as local amenities, roads, schools and shops. For example, Surrey’s school expansion plan will have a positive effect on property prices in the area.
You have two options when buying a second property – through equity or a buy-to-let mortgage.
You could remortgage your current home and use the equity released to put down a deposit for the second property or alternatively buy it outright. However, you will need to prove that you can afford the repayments on two mortgages.
When you buy a second property, there is an extra 3% charge to the standard rate of Stamp Duty Land Tax which works out as follows:
- 3 per cent on the first £125,000
- 5 per cent on the portion between £125,000 to £250,000
- 8 per cent on the portion between £250,000 to £925,000
- 13 per cent on the portion between £925,000 to £1.5 million
- 15 per cent on anything over £1.5 million