Is it a good idea to remortgage to buy another property?
When remortgaging your current home to buy another property, your monthly repayments are likely to be significantly larger than they were – you will have a second mortgage to repay.
We advise that you speak to a mortgage adviser to make sure it makes financial sense. They’ll go through some affordability checks with you, including a credit check and how much you could potentially borrow. They will also discuss with you whether you can afford to pay the higher repayments on your current wage, as failure to do so may result in loss of both properties.
You can also find more helpful information in our article 'What is remortgaging and how does remortgaging work?'
Risks to consider
Remortgaging to buy another property comes with certain risks. Taking on a larger mortgage increases your financial obligations, which can impact your financial stability. If interest rates rise, variable rates can lead to higher repayments, potentially straining your budget. Changes in the property market could affect the value of both your current home and the new property, which is something to bear in mind if you plan to sell in the future.
There's also the potential risk of repossession – if you're unable to keep up with the higher repayments, you could risk losing both homes. Before proceeding with remortgaging, you need to carefully weigh these risks against the potential benefits.
A mortgage adviser can help you assess these risks and explore alternatives before you commit.
Remortgaging when you are self-employed?
If you are self-employed, you may be concerned about whether you will be approved to buy a second property by remortgaging your current home. Being self-employed doesn’t prevent you from remortgaging, however, lenders may apply stricter affordability checks and some lenders may require accounts from the last 3 years as part of your affordability check. Your mortgage adviser will look at your whole situation, including your incomings and outgoings, to help you make the most informed decision.
Can you buy another home if you have bad credit?
If you have bad credit, you will generally require a higher deposit or additional equity in your home if you want to remortgage. It depends on the severity of your credit issues and how recent they were; if it is a one-off or you have consistently had financial problems.
Remortgaging with bad credit isn’t straightforward, however there are specialist lenders who may be able to help, depending on your circumstances. We recommend speaking to your mortgage adviser to guide you in the right direction.
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