You’ve built up equity in your home over the years. Your property’s value has increased, you’ve paid down a decent chunk of your mortgage, and now you’re sitting on what could be a substantial deposit for a second property – locked inside your current home.
The question is: how do you access that equity to fund your next property purchase without selling up?
The answer for many UK homeowners is remortgaging to release equity. Whether you’re looking to build a buy-to-let portfolio, purchase a holiday home, help family members onto the property ladder, or simply diversify your assets, remortgaging can provide the funding you need.
But like any financial decision involving property, it’s not without risks and considerations. Get it right, and you can build significant wealth through property investment. Get it wrong, and you could find yourself overstretched and struggling with dual property commitments.
In this comprehensive guide, I’ll explain exactly how remortgaging to buy another property works in the UK, what lenders look for, the alternatives available, and crucially – whether it’s the right strategy for your circumstances.
Exploring property investment opportunities? Browse our exclusive property listings or contact our financing team to discuss funding options.
What Does It Mean to Remortgage for Another Property?
Let’s start with the fundamentals. Remortgaging means replacing your existing mortgage with a new one – either with your current lender or a different provider.
When you remortgage specifically to buy another property, you’re doing something slightly different from a standard remortgage. You’re borrowing more than your current mortgage balance and taking the difference as cash, which you then use as a deposit for your second property.
Here’s a simple example:
- Your home is worth £400,000
- Your remaining mortgage balance is £150,000
- You remortgage for £280,000 (70% LTV)
- After paying off your existing mortgage (£150,000), you have £130,000 to use as a deposit
That £130,000 becomes your deposit for the second property. Add a new mortgage on the second property, and you’ve effectively used your existing home’s equity to fund an additional purchase.
This process is often called releasing equity or equity withdrawal, and it’s completely different from taking out a second mortgage (which we’ll discuss later).
According to UK Finance, remortgaging activity remains strong, with many homeowners using their equity strategically to fund property investments and life goals.
Common Reasons to Remortgage for a Second Property
People remortgage to buy additional properties for various reasons. Understanding your own motivation helps determine whether this strategy makes sense for you.
Buy-to-Let Investment
This is one of the most popular reasons for releasing equity. Property investment offers rental income, potential capital growth, and portfolio diversification – attractive benefits for wealth building.
With rental yields in many UK areas offering 4-7% gross returns, buy-to-let remains appealing despite recent tax changes and additional regulations. However, you’ll need to factor in:
- Additional stamp duty – Second homes attract a 3% surcharge on standard stamp duty rates
- Landlord responsibilities – Property maintenance, tenant management, legal compliance
- Tax implications – Rental income is taxable, and mortgage interest relief is now limited
- Void periods – Budget for times when the property is empty between tenants
The key to successful buy-to-let is choosing the right location, understanding local rental demand, and ensuring your numbers work even with unexpected costs.
Need specialist buy-to-let financing? Our property finance experts arrange competitive rates for investment properties across all price brackets.
Second Home or Holiday Home
Maybe you’re not interested in tenants and rental income. Perhaps you simply want a weekend retreat, coastal escape, or countryside cottage for your family to enjoy.
This is a lifestyle choice rather than an investment decision, though property can still appreciate over time. Key considerations include:
- Higher stamp duty – The 3% second home surcharge applies
- Dual running costs – Council tax, utilities, insurance, and maintenance on both properties
- Limited usage – Will you use it enough to justify the costs?
- Potential rental income – Could you offset costs by renting it out when not in use?
According to research from Hamptons International, holiday home purchases increased significantly in recent years, driven partly by remote working flexibility and lifestyle changes following the pandemic.
Helping Family Members
Many parents use equity release to help children or other family members buy their first home. This might involve:
- Gifting or lending the released equity as a deposit
- Purchasing a property for them to live in (you own it; they live there)
- Buying together as joint owners
While helping family is admirable, be cautious. Ensure you can afford the increased mortgage payments if circumstances change, and consider proper legal agreements if lending rather than gifting funds.
Let-to-Buy Strategy
This is a clever approach where you keep your current home and rent it out, while buying a new property to live in yourself.
Rather than selling your existing home when moving, you remortgage it onto a buy-to-let mortgage, release equity if needed, and use this plus any additional funds to purchase your new residential property.
Let-to-buy works particularly well when:
- You expect your current area to appreciate significantly
- Your existing property has strong rental potential
- You’re relocating for work but might return
- You want to start building a property portfolio
This strategy effectively turns your home into an investment while giving you the freedom to move.
Need complex property financing arranged? With over £4.2 billion in luxury asset financing facilitated, we specialize in sophisticated property strategies for discerning clients.
Key Factors Lenders Consider
Securing a remortgage to fund a second property isn’t automatic. Lenders carefully assess your application based on several critical factors.
Equity in Your Current Home
The amount you can release depends on your loan-to-value (LTV) ratio – the percentage of your property’s value you’re borrowing.
Most lenders allow remortgaging up to 70-85% LTV, though the exact limit varies by lender and your circumstances. The more equity you have, the more favorable your rates and terms.
Example calculation:
- Property value: £500,000
- Maximum LTV: 80%
- Maximum mortgage: £400,000
- Existing mortgage: £200,000
- Equity you can release: £200,000
Lower LTV ratios typically secure better interest rates. If you’re borrowing above 80% LTV, expect higher rates and more stringent criteria.
Affordability and Income Checks
This is crucial. Lenders don’t just look at whether you can afford the remortgage payments on your first property – they assess whether you can comfortably manage both mortgages if you’re buying a second residential property.
For buy-to-let investments, lenders typically require that rental income covers 125-145% of the mortgage interest, providing a buffer for void periods and unexpected costs.
Your affordability assessment includes:
- Gross annual income from all sources
- Existing financial commitments (credit cards, loans, other mortgages)
- Monthly outgoings (childcare, living costs)
- Credit score and history – missed payments or CCJs significantly impact approval
- Debt-to-income ratio – typically shouldn’t exceed 40-45%
According to Financial Conduct Authority regulations, lenders must conduct thorough affordability assessments to ensure borrowers aren’t overextending themselves.
Employment Status
Your employment situation heavily influences lending decisions.
Employed applicants – Straightforward payslips and P60s make income verification simple. Stable, permanent contracts are viewed most favorably.
Self-employed applicants – Lenders typically require 2-3 years of accounts or SA302 tax calculations. They may average your income across these years, which can disadvantage those with fluctuating earnings.
Company directors – Income is assessed based on salary plus dividends, with lenders examining company accounts to verify sustainability.
Portfolio landlords – If you already own 4+ mortgaged properties, you’ll face additional scrutiny and potentially need specialist lenders.
Purpose of the New Property
Whether you’re buying a residential property for personal use or an investment buy-to-let fundamentally affects your application.
Residential second homes:
- Subject to standard residential mortgage criteria
- Lenders assess dual mortgage affordability
- May face higher rates than primary residences
Buy-to-let properties:
- Require specialist buy-to-let mortgages on the new property
- Assessed based on rental coverage, not personal income alone
- Different lenders specialize in different property types and tenant profiles
Being clear about your intentions from the start ensures you’re guided toward appropriate products.
How to Remortgage to Release Equity: Step-by-Step
If you’ve decided remortgaging is the right route, here’s how to approach it strategically.
Step 1: Determine Your Property’s Current Value
Property values fluctuate, so get an accurate, current valuation. Options include:
- Professional RICS surveyor valuation (£300-£600 but most accurate)
- Estate agent valuation (free but potentially optimistic)
- Online valuation tools (quick but less reliable)
Most lenders will conduct their own valuation as part of the mortgage application, but knowing your approximate value helps plan realistically.
Step 2: Calculate Your Existing Mortgage Balance
Check your latest mortgage statement or contact your lender for an exact redemption figure – the amount needed to pay off your mortgage completely.
Don’t forget to check for early repayment charges (ERCs). If you’re still within a fixed-rate or discount period, you may face penalties of 1-5% of the outstanding balance. Sometimes it’s worth waiting until this period ends.
Step 3: Work Out Available Equity
Subtract your mortgage balance from your property’s value, then calculate what you could borrow at various LTV ratios.
Example:
- Property value: £350,000
- Current mortgage: £120,000
- Current equity: £230,000 (66% of value)
Potential remortgage scenarios:
- At 70% LTV: Borrow £245,000 = Release £125,000
- At 75% LTV: Borrow £262,500 = Release £142,500
- At 80% LTV: Borrow £280,000 = Release £160,000
Remember that higher LTV means higher interest rates, so releasing maximum equity isn’t always optimal.
Step 4: Compare Remortgage Rates and Products
This is where many people benefit from professional advice. The remortgage market is complex, with hundreds of products from dozens of lenders.
Consider:
- Fixed-rate mortgages – Certainty on payments for 2, 3, 5, or even 10 years
- Variable-rate mortgages – Tracker or discount rates that fluctuate
- Interest-only vs repayment – Lower monthly payments with interest-only, but balance doesn’t reduce
- Fees and charges – Arrangement fees, valuation fees, legal costs
Use comparison sites as a starting point, but don’t rely on them exclusively. Many of the best deals come from lenders who don’t appear on comparison platforms.
Step 5: Get Professional Mortgage Advice
A qualified mortgage adviser has access to the whole market and can identify products suited to your specific circumstances. They’ll also handle the application process, chase lenders, and coordinate with solicitors.
This is particularly valuable when:
- You’re self-employed or have complex income
- You have adverse credit history
- You’re purchasing a non-standard property
- You’re arranging multiple mortgages simultaneously
- Your case involves high-value properties or sophisticated structures
At Million Plus, we specialize in high-value property financing and complex mortgage arrangements for clients whose needs extend beyond standard high-street products.
Ready to explore remortgage options? Contact our specialist advisers for a confidential assessment of your circumstances and available options.
Alternative Ways to Finance a Second Property
Remortgaging isn’t your only option. Depending on your circumstances, these alternatives might be more suitable.
Second Mortgage (Secured Loan)
Rather than remortgaging, you could take out a separate second charge mortgage on your existing property. This sits alongside your first mortgage.
Advantages:
- Avoid early repayment charges on your existing mortgage
- Can be quicker to arrange
- Potentially useful if you have an excellent rate you don’t want to lose
Disadvantages:
- Generally higher interest rates than remortgaging
- Two separate monthly payments to manage
- The second charge lender has lower priority if you default
Second mortgages work best when your current mortgage has a great rate with significant ERCs, making remortgaging uneconomical.
Bridging Loan
Bridging finance provides short-term funding (typically 12-18 months) to “bridge” a gap before longer-term finance is arranged.
Common scenarios:
- Buying at auction with a 28-day completion deadline
- Purchasing before your current property sells
- Buying unmortgageable properties that need renovation
- Acting quickly on time-sensitive opportunities
Bridging loans charge higher interest rates (from 0.5% per month) but offer speed and flexibility that standard mortgages can’t match. Interest can be “rolled up” and paid at the end, preserving cash flow during your project.
We’ve arranged bridging finance for countless clients purchasing everything from auction bargains to luxury developments requiring refurbishment before traditional mortgages become available.
Further Advance from Your Current Lender
Some lenders offer further advances – essentially lending you additional money on top of your existing mortgage without fully remortgaging.
This can be quicker and cheaper than remortgaging if your current lender offers competitive rates. However, you’re limited to one lender’s products rather than accessing the whole market.
Savings or Investment Liquidation
If you have substantial savings or investments, using these for your deposit avoids increasing your mortgage debt.
Consider:
- Opportunity cost – Could your investments generate better returns than property?
- Tax implications – Selling investments may trigger capital gains tax
- Liquidity – Maintaining accessible emergency funds is crucial
- Risk diversification – Don’t put all your wealth into property
For many investors, a balanced approach works best – using some savings while also leveraging property equity, maintaining diversification across asset classes.
Securities-Based Lending
For high-net-worth individuals with significant investment portfolios, securities-based lending offers an elegant solution. You borrow against your stock portfolio, bonds, or other securities without selling them.
Benefits:
- Lower interest rates than most mortgages (from 3-5%)
- No impact on your property mortgages
- Tax efficiency – avoid triggering capital gains tax
- Maintain investment positions – your portfolio continues working for you
This is one of my specialties at Million Plus. We arrange securities-based lending, single stock loans, and portfolio lending for clients who want to access liquidity without disrupting their investment strategies or taking on traditional mortgages.
High-net-worth individual seeking sophisticated financing? Explore our private banking solutions including securities-based lending, single stock loans, and blended facilities.
Risks and Considerations
Before proceeding with remortgaging to buy another property, carefully consider the potential downsides.
Significantly Higher Monthly Commitments
You’ll be managing two mortgages instead of one. If you’re buying a second residential property, lenders will ensure you can afford both, but affordability tests don’t account for lifestyle changes, emergencies, or economic downturns.
What if:
- One of you loses your job?
- Interest rates rise significantly?
- You face unexpected major expenses (health, family, property repairs)?
Property-Specific Risks
For buy-to-let investments:
- Void periods – Properties sitting empty between tenants generate no income but still require mortgage payments
- Problem tenants – Rent arrears, property damage, legal eviction costs
- Maintenance and repairs – Boilers break, roofs leak, and you’re responsible
- Market changes – House prices can fall as well as rise
- Regulatory changes – Tax rules, safety requirements, and licensing laws constantly evolve
For second homes:
- Dual running costs – Everything from insurance to utilities essentially doubles
- Limited usage – Research shows second homes are often used less than anticipated
- Maintenance challenges – Harder to maintain properties you don’t live in full-time
Interest Rate Risk
If you’re on a variable-rate mortgage, your payments could increase if the Bank of England raises interest rates. Even fixed-rate mortgages eventually revert to variable rates when the fix period ends.
The Bank of England has demonstrated in recent years that rates can change quickly and substantially. Stress-test your finances: could you cope if rates rose by 2-3%?
Reduction in Available Equity
Increasing your mortgage reduces the equity in your primary home. This matters if:
- You need to move urgently and can’t clear the mortgage from sale proceeds
- You face financial difficulties and need to access equity quickly
- Property values fall and you end up in negative equity
Impact on Future Borrowing
Taking on additional property debt affects your credit profile and future borrowing capacity. If you plan other major purchases (business investment, third properties, lifestyle assets), having two mortgages may limit your options.
When Is It Worth Remortgaging to Buy Another Property?
So when does this strategy make financial sense? Consider these factors:
You Have Strong Equity Position
Ideally, you should have at least 40-50% equity in your current home before considering this route. This gives you meaningful funds to release while maintaining a healthy LTV ratio and competitive rates.
Releasing equity when you’re already at 85% LTV leaves little room for maneuver and exposes you to higher rates and negative equity risk if values fall.
Your Income Is Stable and Sufficient
You need confidence in your ongoing income to service both mortgages comfortably. This typically means:
- Permanent employment or well-established self-employed income
- Income that exceeds minimum requirements with comfortable headroom
- Emergency savings covering 6-12 months of all mortgage payments
- No plans for major career changes or early retirement
The Investment Case Is Solid
For buy-to-let, run the numbers rigorously:
- Does rental income cover the mortgage with a healthy buffer?
- Are you accounting for void periods, maintenance, and letting fees?
- Is the location experiencing genuine rental demand and growth?
- Does the investment generate positive cash flow after all costs?
For second homes, be honest about usage and value for money. Will you genuinely use it enough to justify the substantial ongoing costs?
Market Conditions Are Favorable
Consider:
- Property values – Is the market stable or overheated in your target area?
- Interest rates – Are you locking in rates at a reasonable level?
- Rental market – For buy-to-let, is local rental demand strong?
- Economic outlook – Are conditions generally stable or uncertain?
Timing isn’t everything, but it matters. Purchasing near market peaks or during economic instability increases risk.
You Have Long-Term Perspective
Property investment is a long-term strategy. If you might need to sell within 2-3 years, transaction costs (stamp duty, legal fees, estate agent fees) can easily wipe out any gains.
The sweet spot for property investment is typically 5-10+ years, allowing time for capital appreciation, rental income accumulation, and mortgage paydown.
You’re Comfortable with Landlord Responsibilities
If buying to let, ask yourself honestly: Are you prepared for tenant calls at inconvenient times? Comfortable handling legal requirements and safety regulations? Ready to deal with void periods and property maintenance?
If the answer is no, you might be better served by other investment vehicles or hiring a property management company (which reduces returns but removes stress).
Expert Advice and Next Steps
Remortgaging to buy another property can be an excellent wealth-building strategy when executed properly with appropriate financing, solid planning, and realistic expectations about costs and responsibilities.
However, it’s also a significant financial commitment that ties up capital, increases debt, and exposes you to multiple risk factors. The difference between success and struggle often comes down to getting professional guidance at the planning stage.
Why Professional Advice Matters
A qualified mortgage adviser brings:
Whole-of-market access – Including lenders and products not available directly to consumers
Complex case expertise – Essential for self-employed, portfolio landlords, high-value properties, or unusual circumstances
Regulatory knowledge – Understanding current rules, tax implications, and compliance requirements
Strategic planning – Structuring your finances optimally across both properties
Time savings – Handling applications, documentation, and lender negotiations on your behalf
At Million Plus, we go beyond simple mortgage brokering. With over £4.2 billion in luxury asset financing facilitated and three decades of experience, we understand property finance at every level – from first-time landlords to sophisticated international investors.
Our Specialist Services
- Remortgaging for equity release
- Buy-to-let mortgage arrangements
- Second property financing
- Let-to-buy strategies
- High-value residential mortgages
- Private bank lending relationships
- International property acquisitions
- Complex income structures
- Bridging loans and refurbishment finance
- Securities-based lending
- Single stock loans (among the cheapest global borrowing rates)
- Blended facilities optimizing overall costs
- Crypto and digital asset lending
Strategic Wealth Planning
- Portfolio leverage strategies
- Tax-efficient property structures
- Cross-border financing
- Multi-property acquisition plans
What Makes Us Different
Paul Welch is regularly featured in the Financial Times, Bloomberg, and Forbes as one of the UK’s leading property finance specialists. His position on the Bank of England’s Decision Maker Panel reflects the depth of expertise we bring to every client relationship.
We work with everyone from first-time landlords to ultra-high-net-worth individuals building international property portfolios. Whatever your scale or ambition, we provide bespoke financing solutions tailored to your specific goals and circumstances.
Ready to Explore Your Options?
Whether you’re taking your first steps into property investment or expanding an established portfolio, we’re here to help you structure the right financing solution.
Get in Touch
📧 Email: paul.welch@millionplus.com
📞 Phone: +44 207 519 4950
🌐 Financing Solutions: millionplus.com/financing
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