Mortgage for second house when we own our first?

[farmdreams]

Just wondering if anyone has any experience of this and what the lending criteria are?

In case of triggering a second homes debate, I don't agree with having two houses and am very aware of the impact of holiday homes particularly in the area my DH grew up in. DH and I plan to buy a rundown property on a small piece of farmland that we will restore over a period of time and eventually move to. At that stage we plan to sell our current house.

We have kept a tiny mortgage on our current house (value around 300k) so owe around 5k, with a small payment required each month. We could pay this off but thought about trying to remortgage and take equity out to buy this second place? Alternatively we could try to get a second mortgage for the smallholding. I just wondered how affordability etc is assessed? In what sense is our existing house taken into account or not taken into account? The smallholding will not be a buy to let or commercial interest really, it's just that it doesn't suit us to move just yet and the property would not be suitable for us to live in for some time.

Any advice would be very welcome.

Bumping

You have the asset-backing but do you have the income and outgoings history to support the payments? If so then extending your home mortgage should work out cheaper. If you go for a loan on the farmhouse it may be classified as a development loan depending on various factors and the rate could be 3x or more than the homeowners' rate.

Also most banks won't let you borrow on 1 House to purchase another. You will have to tell them it's for home improvementa or something

I took £200k out of a property I owned outright and put it into the property I live in now, getting a small BTL mortgage for the £200, which is being paid back by the rental income. It's doable.

I’d recommend consulting with a financial advisor and a solicitor - ideally with a background in financial and legal issues in agriculture.

I didn’t know this. We did this with Barclays and they were fine about us borrowing against house 1 to part fund house 2.

OP, do your sums to check the best way to do it. It may be that spreading the borrowing across both properties makes most sense for LTV and rates.