Second home mortgage: How much will a bank lend for the purchase of a used home?

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Most Spaniards have a second home. Whether in the city, on the beach or in the countryside, buying a second home is more common than you think. Do you already own a property and are you thinking of buying a second home? In this article we tell you everything you need to know about mortgages for a second home.

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Second Home Mortgage | Second Residence

What is a second mortgage?

When you consider taking out a mortgage, you have to take into account that there are two types of loans: the one you take out to buy a first home and the mortgage for a second home. In the latter case, we refer to buying a property when you already own one. 

One of the main characteristics of acquiring a second home is that it is not usually the habitual residence. The use of these second homes is, in most cases, holiday and as you already have a first residence, the conditions when applying for a mortgage vary. 

And the fact is that, contrary to what many may think, the mortgage for a second home does not refer to the second time that a mortgage loan is requested, but to the mortgage that is requested for a home that will not be used as a primary residence. 

That is why the conditions offered by banks, such as the amount to be lent, the repayment period or the interest rates, are different from those given in first home mortgages

Bank terms for a second home mortgage

What are the banking conditions that change when applying for a mortgage for a second home?

Mainly, the percentage of financing and repayment terms. From Trion Finance, we want to make the process of obtaining a second mortgage easier with a mortgage simulator to anticipate the terms and interest rate of the same.

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Second Home Mortgage | Lower financing

  1. Less financing: In second home mortgages, the financing on the original price of the house is usually less than that granted in a first mortgage. In this sense, banks usually provide up to 60% of the value, while for a first mortgage is usually granted up to 80%. For this reason, the initial contribution or down payment required is usually higher.
  2. Decreases the repayment period: Another feature of this type of mortgage is that the repayment period is also usually shorter. Most of the entities are used to reduce it up to 20 or 25 years when it is a second home.
  3. Increasing interest rates for second homes: And what about the interest rates applied to the mortgage loan? In some cases they are also usually higher than the commissions for the purchase of a first home, since the loan is granted for a shorter period of time. Using a mortgage comparator will make it easier when choosing a bank for a second mortgage.

Mortgage rates for second homes

Second home mortgages can be either fixed mortgages, variable mortgages or mixed mortgages.

Fixed second home mortgage

Fixed mortgages are those in which the interest rate remains constant for the duration of the loan. Generally, this type of mortgage loan usually charges a higher interest rate than a variable mortgage. Here you can find the best fixed rate mortgages.

Variable second home mortgage

When you sign a variable second home mortgage, the bank applies an interest rate that changes over time. The variability of the interest rate is reviewed every six months or every year. The bank makes this calculation depending on the interest rate that is being applied at the time of the review. In Spain, the Euribor is usually used as a reference to calculate the variable interest rate. Here you can find the best variable rate mortgages. 

Mixed second home mortgage 

Halfway between the two previous options is the mixed second home mortgage. But, how do mixed mortgages work? The bank starts charging a fixed interest rate during the first years of the loan. During the first 5 or 10 years of the loan, the bank always charges the same interest rate. From a date agreed in the contract, the bank applies a variable rate. Its main advantage is that the fixed interest rate charged is lower than that of fixed mortgages, so you will pay less during the first years of the loan. Here you can find the best mixed mortgages.

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Second Home Mortgage | Rates and Conditions

When signing a mortgage for a second home it is important to understand that the banking conditions cannot be the same as for a first residence. The property is not bought out of necessity, but for leisure purposes. In addition, banks impose stricter requirements to ensure that the buyer has the capacity to repay the loan. So if you are thinking of buying a second home, it is advisable to plan your future savings, instalments, terms and interest. 

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