Releasing equity from your existing home to fund the deposit on a buy-to-let, second home, holiday let, or to gift to a family member is an accepted capital raising purpose with many lenders. Both the residential remortgage and the second property mortgage need to work simultaneously.
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Yes, you can remortgage to buy a second property. Equity released from your existing home funds the deposit on the second purchase. The key challenge is that two sets of lending criteria must work at the same time -- the lender on your existing property and the lender on the second property both need to be satisfied simultaneously. The total equity required includes the deposit plus the stamp duty surcharge, which cannot be added to the mortgage. Call 01422 354011 or use the form below.
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Yes. Releasing equity through remortgage to fund a second property deposit is an accepted capital raising purpose with many lenders.
The process works by remortgaging your existing property at a higher balance, with the additional capital released at completion used as the deposit on the second purchase. The equity released replaces or supplements savings as the deposit fund. What makes this more complex than a standard capital raising remortgage is the requirement that two mortgages need to be structured and approved simultaneously.
The lender on your existing property assesses the capital raising against your current equity and household income. The lender on the second property -- whether that is a buy-to-let mortgage, a second residential mortgage, or a holiday let product -- assesses the new purchase under its own criteria. Both must work within the same income and equity position. Selecting one without considering the other can result in a transaction that cannot be completed.
Selecting the capital raising lender for the existing property and the lender on the second property separately creates the risk that one application cannot proceed because the other has been structured sub-optimally. Woodhall Mortgages models the combined affordability position across both mortgages before recommending the structure for either, so both applications are achievable from the same income and equity position before either is submitted.
The equity is the deposit. The purpose determines which mortgage product the second property needs.
Equity funds the deposit on a residential investment property. The buy-to-let mortgage is assessed primarily against projected rental income. Most buy-to-let mortgages are not regulated by the FCA. Rental income is not guaranteed and property values can fall.
A second residential property for personal use, assessed against household income rather than rental income. The SDLT surcharge applies. Specialist holiday let criteria applies where the property will be commercially let to guests.
A property commercially let as short-term holiday accommodation. Assessed against projected letting income under specialist holiday let mortgage criteria. Both property values and letting income can vary significantly over time.
Equity released and gifted to a child or close family member for their first home. The recipient declares the gift on their mortgage application. Most lenders require a solicitor's letter confirming no repayment is expected and the donor has no interest in the property.
Two separate mortgage assessments must both pass at the same time. This is the central challenge in structuring a second property purchase through equity release.
The residential remortgage lender assesses whether the increased mortgage payment is affordable after the capital raise. The second property lender assesses the new purchase under its own product criteria. For a buy-to-let, that means the rental income coverage ratio must be satisfied. For a second residential property, it means personal income supports both mortgage payments simultaneously.
The lender assesses whether the new increased residential mortgage payment is affordable based on household income and the new LTV after the capital raise. The capital raising purpose is declared as property purchase and the lender may ask for confirmation of the second purchase plans.
For buy-to-let: the lender assesses the rental income coverage ratio against the mortgage payment. For a second residential property: personal income must support both payments. Both assessments must be confirmed as achievable before either application is submitted.
Second properties attract an additional SDLT surcharge on top of standard residential rates. It cannot be added to the mortgage and must be factored into the total equity required.
The surcharge means the total equity needed from the remortgage is larger than just the deposit. A buyer purchasing a second property at £200,000 needs not only the 25% deposit of £50,000 but also the stamp duty payable at completion. Applying for too little equity and discovering the shortfall at completion creates significant practical and financial problems. SDLT rates, thresholds and any surcharges are subject to change and must be confirmed with a solicitor before exchange of contracts.
Deposit + stamp duty surcharge + solicitor fees = total equity needed. Applying for the deposit alone and funding the SDLT separately from savings that are not confirmed at the point of application is a common error. Woodhall Mortgages calculates the full equity requirement before any application is submitted. SDLT figures should always be confirmed with a solicitor.
| Purchase Price | Standard SDLT | 5% Surcharge | Total SDLT | 25% Deposit | Total Equity Needed |
|---|---|---|---|---|---|
| £150,000 | £500 | £7,500 | £8,000 | £37,500 | £45,500 |
| £200,000 | £1,500 | £10,000 | £11,500 | £50,000 | £61,500 |
| £250,000 | £2,500 | £12,500 | £15,000 | £62,500 | £77,500 |
| £300,000 | £5,000 | £15,000 | £20,000 | £75,000 | £95,000 |
Indicative only. SDLT rates, thresholds and any surcharges applicable to second properties are subject to change. Always confirm your SDLT liability with a solicitor before exchange of contracts. A surcharge of 5% is used here for illustration; the applicable rate may differ.
Purely illustrative. Not based on a live product. Shows both mortgages structured together.
Existing position: Residential property valued at approximately £320,000. Outstanding mortgage approximately £140,000 at an assumed SVR of 6.8%. Household income approximately £61,000. Savings available approximately £10,000.
Second property: Buy-to-let purchase at approximately £220,000. Deposit at 25%: £55,000. SDLT at assumed current rates: approximately £8,500. Total funds required at completion: approximately £63,500. Less savings of £10,000: equity to raise approximately £53,500.
Residential remortgage: New total of approximately £193,500 at approximately 60.5% LTV on a five-year fixed at an assumed 4.29%. New monthly payment approximately £1,059.
Buy-to-let mortgage: £165,000 at 75% LTV at an assumed interest-only rate of 5.19%, producing a monthly payment of approximately £714. Projected rental income of approximately £1,050 per month satisfies the assumed rental coverage ratio in this illustration.
Purely illustrative using assumed rates. Not based on a live product. Most buy-to-let mortgages are not regulated by the FCA. Property values can fall as well as rise and rental income is not guaranteed. SDLT figures are indicative and should be verified with a solicitor. Individual outcomes depend on your specific circumstances and lender criteria at the time of application.
Both mortgages modelled together. Deposit, stamp duty and combined affordability all calculated before any application. Call 01422 354011 or use the form below.
Get My Second Property AssessmentFree consultation. £299 fee on mortgage offer if you proceed. Most buy-to-let mortgages not regulated by the FCA.
Reviews reflect individual experiences and do not guarantee similar outcomes.
Financial promotion. Woodhall Mortgages is authorised and regulated by the Financial Conduct Authority (FRN 762513). Woodhall Mortgages is a whole-of-market mortgage broker. We consider a comprehensive range of mortgages from across the market, but not all lenders or products may be included. A fee of £299 is payable on receipt of a formal mortgage offer if you choose to proceed. Full fee details will be provided before any charge becomes due. This fee is non-refundable once charged. We may receive commission from lenders, which will be disclosed before any application is submitted. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Think carefully before securing additional debt against your home. Most buy-to-let mortgages are not regulated by the Financial Conduct Authority, although some buy-to-let lending may fall within a different regulatory framework. Property values can fall as well as rise and rental income is not guaranteed. Second properties in England may attract an additional SDLT surcharge. SDLT rates and thresholds are subject to change and should be confirmed with a solicitor before exchange of contracts. Deposit percentages and indicative figures on this page are general indications only and not specific lender criteria. Approval depends on your circumstances and lender criteria.
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