Can I Remortgage to Buy Another Property?
Many homeowners consider buying an additional property at some point, whether as an investment, a second home, or to help a family member. One common question is whether it is possible to remortgage to buy another property rather than saving a separate deposit from scratch.
In the UK, remortgaging to raise funds for another property purchase can be possible, depending on affordability, equity, and lender criteria. However, it involves careful assessment and comes with important considerations. This guide explains how remortgaging for another property typically works, what lenders look at, and what to be aware of before proceeding.
This article provides general information only and does not offer regulated mortgage advice.
What Does Remortgaging to Buy Another Property Mean?
Remortgaging to buy another property usually involves increasing your existing mortgage, or switching to a new lender, to release equity from your current home. The released funds can then be used as a deposit or full purchase amount for another property.
For example:
- Current property value: £350,000
- Outstanding mortgage: £180,000
- Available equity (subject to criteria): £170,000
A lender may allow part of this equity to be released, depending on loan-to-value limits and affordability.
What Is Equity and How Is It Used?
Equity is the difference between your property’s market value and the amount you still owe on your mortgage.
Equity can sometimes be used for:
- A deposit on another residential property
- A deposit for a buy-to-let property
- Purchasing a second home
- Supporting a family member’s purchase
Lenders do not allow unlimited access to equity. How much can be released depends on risk, affordability, and the purpose of the funds.
Is It Allowed to Remortgage to Buy Another Property?
In general terms, yes, it may be possible to remortgage to buy another property, but lender approval is required.
Mortgage lenders usually want to know:
- How much equity you want to release
- What the funds will be used for
- Whether you can afford both mortgages
- Whether the new property is residential or buy-to-let
The purpose of the remortgage is an important part of the assessment.
Residential vs Buy-to-Let Purchases
The type of property you are buying has a significant impact on how lenders assess the remortgage.
Buying a Buy-to-Let Property
If you are remortgaging to buy a buy-to-let property, lenders often assess:
- Rental income potential of the new property
- Your existing mortgage commitments
- Personal income and affordability
- Deposit size (often 25% or more)
Some lenders allow equity from a residential property to be used as a buy-to-let deposit, subject to criteria.
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Buying Another Residential Property
If the additional property is for personal use (such as a second home), lenders focus more heavily on:
- Your personal income
- Affordability of both properties
- Ongoing running costs
Affordability assessments are usually stricter for second residential properties than for buy-to-let purchases.
Loan-to-Value (LTV) Limits
Loan-to-value plays a key role when remortgaging to raise funds.
Most lenders cap borrowing at certain LTV levels, such as:
- 75% to 85% for residential remortgages
- Lower limits depending on circumstances
For example, if your property is worth £300,000 and the lender allows borrowing up to 75% LTV, the maximum total mortgage would be £225,000.
Existing mortgage balance and desired equity release must fit within this limit.
Affordability Checks
Affordability is one of the most important factors when remortgaging to buy another property.
Lenders assess:
- Your income
- Existing mortgage repayments
- Any new mortgage commitments
- Household expenditure
- Stress testing against higher interest rates
Even if there is significant equity, lenders will not approve a remortgage unless affordability is demonstrated.
Credit History Considerations
Your credit history is reviewed as part of the remortgage application.
Lenders typically look at:
- Missed payments
- Defaults or CCJs
- Overall credit conduct
- Recent financial behaviour
Strong recent credit conduct can support a remortgage application, while recent adverse credit may reduce lender options.
Interest Rates and Product Choices
Remortgaging to release equity can affect the interest rate on your existing mortgage.
Potential impacts include:
- Moving to a higher LTV band
- Losing a low fixed-rate deal
- Early repayment charges on the current mortgage
These costs should be considered alongside the benefits of releasing equity.
Tax and Additional Property Costs
Buying another property often involves additional costs beyond the mortgage itself.
These may include:
- Higher Stamp Duty rates for additional properties
- Legal and conveyancing fees
- Valuation and survey costs
- Ongoing maintenance and insurance
These costs are not usually funded through the mortgage and should be budgeted for separately.
Using Equity as a Deposit vs Cash Purchase
Some buyers use released equity purely as a deposit, while others use it to fund the entire purchase.
Lenders usually prefer equity to be used as:
- A deposit for a mortgage-backed purchase
Buying outright using equity may involve additional scrutiny, particularly if it significantly increases overall borrowing.
Risks to Consider
Remortgaging to buy another property increases overall borrowing and risk.
Key considerations include:
- Exposure to interest rate changes
- Responsibility for multiple mortgages
- Periods of rental voids (for buy-to-let)
- Changes to personal income
Lenders assess these risks carefully during underwriting.
Common Misunderstandings
“Equity Means Guaranteed Approval”
Equity alone is not enough. Affordability and credit checks still apply.
“Rental Income Always Covers the Mortgage”
Rental income is assessed conservatively and may not fully offset affordability checks.
“You Can Release Any Amount of Equity”
Equity release is limited by LTV and affordability.
When People Consider Remortgaging for Another Property
Homeowners often explore this option when:
- Their property has increased in value
- Their existing mortgage balance has reduced
- They want to invest rather than sell
- They want to support a family member
Timing and financial stability are key factors.
Preparing Before You Remortgage
People often prepare by:
- Reviewing current property value
- Understanding existing mortgage terms
- Checking early repayment charges
- Reviewing credit reports
- Assessing realistic affordability
Preparation can help avoid unexpected costs or delays.
Remortgaging vs Other Options
Some homeowners compare remortgaging with alternatives such as:
- Saving a separate deposit
- Using other investments
- Selling the current property
Each option has different financial implications.
Summary
So, can you remortgage to buy another property? In many cases, yes, but it depends on equity levels, affordability, credit history, and lender criteria. Remortgaging can be a way to access funds without selling your existing home, but it increases borrowing and long-term commitments.
Understanding how lenders assess remortgages for additional property purchases can help you approach the process with realistic expectations and clearer planning.
This article provides general information only. For personalised guidance, regulated mortgage advice is required.
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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.