| Second property (not buy to let) | ||
There are often reasons people want an additional property, such as a week home closer to work, a granny flat, a holiday home or another home to live in whilst they let their existing home out. Some lenders can consider such situations, whilst others are less obliging as they want earned income to cover both mortgages. A number of lenders are not too concerned with your existing mortgage and can treat a new purchase without reference to the existing mortgage remaining in place. Watch point – Beware some lenders will want your existing lender to confirm they are aware you will be letting your existing property. Buildings insurance – some people fail to inform lenders they will / have let a property and end up with buildings insurance based upon the owner residing. In the event of a claim the insurer may decline to pay – out where they find evidence of tenants (for example by searching the credit files against the property that would quickly reveal non relatives were/are present, and those individuals may be quizzed and their Bank statements looked at as will the owners). Tax – if set up correctly a second home can be established in such a manner as to avoid capital gains Tax upon disposal. |