If you are looking to buy another property, one of the most common ways to fund the purchase is to remortgage your existing property.
Many homeowners choose to release equity from their current property to raise funds for a second property, whether that is a buy-to-let property, holiday home, or investment property.
In simple terms, this involves raising funds or releasing equity from an existing property, whether it is residential or buy-to-let, and using those funds to purchase another property, either as a buy-to-let or a second residential home.
Remortgaging can be a flexible way to secure financing, but it is important to understand how much equity you have, how lenders assess affordability, and how taking on two mortgages could affect your financial situation.
The Quick Answer
A remortgage to buy another property allows you to release equity from your existing home and use it as a deposit or full purchase funds for a new property.
You can either remortgage your current mortgage to raise funds or take a separate loan secured against it. Your borrowing depends on how much equity you have, your credit history, and your ability to manage mortgage repayments across two mortgages.
Lenders will assess your loan-to-value, income, and overall financial commitments before offering a new mortgage deal.
What does remortgaging to buy another property mean?
Remortgaging means replacing your existing mortgage with a new mortgage or increasing your borrowing to raise funds.
When you remortgage to buy another property, you:
- Release equity from your current property
- Use that equity as a deposit or purchase funds
- Take on a new mortgage for the second property
This approach is commonly used for:
- Buy-to-let property purchases
- A second property or holiday home
- Building a property portfolio
How to release equity from your existing property
The amount you can raise depends on how much equity you have built up.
How much equity do you need?
Equity is the difference between:
- The value of your current property
- Your outstanding mortgage balance
If house prices have increased or you have reduced your existing mortgage balance, you may have sufficient equity to fund another property purchase.
Loan-to-value and borrowing limits
Mortgage lenders will assess your loan-to-value after releasing equity.
Most lenders require:
- A certain level of equity remaining in your existing home
- Affordable monthly repayments across both mortgages
The more equity you have, the easier it is to secure financing.
Ways to remortgage to buy another property
Full remortgage
You can switch to a new mortgage deal and borrow more at the same time.
This allows you to:
- Release equity
- Potentially access better interest rates
- Move to a new lender if needed
Further advance with your existing lender
Some lenders allow a further advance, which is additional borrowing on top of your existing mortgage.
This option:
- Keeps your main mortgage in place
- Adds a separate loan secured against your property
- May result in separate loans with different rates
Secured loan or second mortgage
A secured loan or second mortgage is another way to raise funds without changing your current mortgage deal.
This is:
- A separate loan secured against your existing home
- Often used when an early repayment charge applies
- Useful if your current mortgage deal has favourable terms
Using a remortgage for different property types
Buy-to-let property
A common reason to remortgage to buy another property is to purchase a buy-to-let property.
Lenders will assess:
- Rental income potential
- Deposit size
- Your financial situation
Holiday home or second residential property
You may also remortgage to buy a holiday home or second residential property.
This is usually assessed under a residential mortgage and may require a higher deposit.
Investment property or property portfolio
For those building a property portfolio, remortgaging can help raise funds for multiple property purchases over time.
Can you afford two mortgages?
Before proceeding, lenders will carry out affordability checks.
They will assess:
- Income and debt repayments
- Existing mortgage payments
- Monthly repayments on the new mortgage
- Credit card debt and other financial commitments
You must show that you can comfortably afford higher monthly repayments across both properties.
Costs to consider when remortgaging
Early repayment charge
If you leave your current mortgage deal early, you may need to pay an early repayment charge. This can impact whether remortgaging is worthwhile.
Fees and associated costs
Costs may include:
- Legal fees
- Valuation fees
- Arrangement fees
- Stamp duty on the new property
These should all be factored into the overall cost of the purchase.
Interest rates and overall cost
While remortgaging may offer lower interest rates, borrowing more or extending your mortgage term can increase the total interest you pay over time.
What can affect your remortgage application?
Several factors influence whether you can remortgage to buy another property:
- Credit history and credit rating
- Existing mortgage balance and loan-to-value
- Income and affordability
- Type of property being purchased
- Whether you have bad credit
- Your overall financial situation
Most lenders will also consider your mortgage term and how long you plan to hold the property.
How The Mortgage Pod helps you remortgage to buy another property
At The Mortgage Pod, we help many homeowners secure financing to buy another property by using equity from their existing home.
We help by:
- Assessing how much equity you have and how much you can raise
- Comparing mortgage products across lenders
- Identifying whether to remortgage or use a secured loan
- Structuring borrowing across two mortgages to keep payments affordable
- Supporting your remortgage application and property purchase from start to finish
Our aim is to help you secure the right mortgage deal while managing your overall financial commitments.
Frequently Asked Questions
Can I remortgage to buy another property?
Yes. Many homeowners remortgage their existing property to release equity and fund the purchase of another property.
How much equity do I need to buy another property?
You need sufficient equity based on your loan-to-value and outstanding mortgage. Most lenders require a deposit for the new property and enough equity remaining in your existing home.
Can I have two mortgages at the same time?
Yes. Many people have two mortgages when buying a second property or buy to let property, provided they can afford both.
Is it better to remortgage or take a second mortgage?
This depends on your current mortgage deal, interest rates, and whether an early repayment charge applies. A mortgage broker can help you compare options.
What costs are involved when buying another property?
Costs include legal fees, valuation fees, mortgage fees, and stamp duty. These should be considered alongside your purchase price and borrowing.
Can I remortgage with bad credit?
It may be possible, although lender choice is more limited. Some mortgage providers may still offer options depending on your financial situation.
