Second Charge for Investment Property

Posted on 10 February 2016 by Sarah

We have a property worth approx £300,000. We currently have a mortgage of £75,000 which is on a very low tracker rate(fixed for the duration of the term). We would like to purchase a second property for approx £130,000 to rent out. So as not to lose the benefit of our low interest mortgage, could we take out a second mortgage, (interest only) on our existing property to fund the purchase.

Can I raise money on a second charge to get a investment property?

Hi Sarah,

There a number of ways to approah your enquiry. You most certainly could take a 'second charge' loan out on your current property, however as second charge rates are far more expensive than residential rates, your aggregate loan of £205,000 could be more expensive than you like. If your existing lender would agree to a further advance, then we can look at an alternative.

The most obvious one would be to lower the second charge loan and take a Buy To Let mortgage out for the remainder. That would give you £75,000 on your low tracker, £32,500 on the second charge, and the remaining £97,500 on a Buy To Let mortgage.

If you would like to discuss this in more detail then please contact one of our mortgage experts on 0344 346 3672.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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