Home finance
Second Home Options
A lifetime mortgage secured on a holiday home or second property rather than the main residence, for owners who want to release value without touching the family home.
Dingle Peninsula, Co. Kerry · Maoileann, CC BY-SA 4.0
Who it is for
Owners of a second or holiday property
What it does
- Secured on a second home, not the main residence
- Property must not be let on an assured tenancy
- Fixed rate for life with no negative equity guarantee
- Personal occupation for part of the year required
The product in full
Some clients have equity they would like to use and no wish to touch the family home to reach it. A holiday cottage in Kerry, a flat kept from an earlier life, a property bought for retirement and not yet lived in — all of it is value, and none of it is the main residence.
Second Home Options is a lifetime mortgage secured on that property instead. The mechanics are the same as the rest of the range: no monthly payment, a rate fixed for life, interest rolled up, and a no negative equity guarantee. The differences are in the eligibility criteria, and they exist because a property the owner does not live in full time is a different security.
Two conditions matter most. The property must not be let on an assured tenancy — a lifetime mortgage cannot sit behind a tenant with security of tenure — and the owner must personally occupy it for part of the year. Holiday letting is possible by agreement, and it is worth raising at application rather than after completion.
The loan-to-value is lower than on a main residence, up to 34%, and the minimum property value is higher at £150,000. Both reflect the same thing: a second home is a less certain security and is priced accordingly.
Literature
Product literature is issued to appointed intermediaries. Ask your underwriter, or request it through the enquiry form.
- Key facts illustrationOn request
- Property eligibility noteOn request
How it works
What happens, in order
From the first enquiry to the point the cover, the contract or the facility is in place.
Eligibility of the property is checked first
Against the property eligibility note: tenure, no assured tenancy, personal occupation for part of the year, minimum value £150,000.
Any letting arrangement is disclosed
Holiday letting is possible by agreement. An assured tenancy is not, and it is better established now than at completion.
The property is valued and terms issued
Up to 34% loan to value, with a Key Facts Illustration.
The loan completes with the rate fixed for life
No monthly payment, interest rolled up, no negative equity guarantee.
Repayment on death or long-term care
From the sale of the second property. The main residence is not security for this loan.
The numbers
A worked example
Illustrative arithmetic, so the shape of the product is visible rather than described. Nothing here is a quotation or a projection.
A £400,000 holiday home, with the main residence untouched
Illustrative figures for a client of 70 releasing against a second property.
- Second property value
- £400,000
- Main residence valueNot security for this loan, and not affected by it
- £520,000
- Maximum loan to value
- 34%
- Released
- £136,000
- Illustrative fixed rate
- 6.9% a year, rolled up
- Balance after 15 years
- £368,000
- Letting
- Holiday letting only, by agreement
- Personal occupation
- Required for part of the year
Illustrative and not a quotation. The 34% figure is the product maximum and the actual loan to value depends on the youngest borrower’s age. A Key Facts Illustration carries the real rate, charges and projected balances.
Which property is security, and which is not
The illustrative case above.
View these figures as a table
| Released against the property | Equity retained | |
|---|---|---|
| Second home — Security for the loan | £136k | £264k |
| Main residence — Untouched | £0k | £520k |
Suitability
Where the Second Home Options fits
The cases it answers, the cases it does not, and what an underwriter needs before quoting.
It is the right answer when
- Owners of a second or holiday property who do not want to borrow against the main residence.
- Properties worth £150,000 or more, personally occupied for part of the year.
- Clients whose second property is either unlet or holiday let by agreement.
Look at something else when
- Property let on an assured tenancy — that is the Over 55 Buy-to-Let Option.
- A main residence, which the rest of the range covers at a higher loan to value.
- A property the client never personally occupies.
What we need to quote
- 1.The broker’s suitability assessment and the clients’ ages.
- 2.Details and tenure of the second property, and its estimated value.
- 3.Any letting arrangement, and confirmation of personal occupation.
Questions
What brokers ask us about this product
Can the property be let?
Holiday letting is possible by agreement. An assured tenancy is not compatible with this product, and disclosing an existing one early avoids a declined application at valuation.
Why is the loan to value lower than on a main residence?
Because a property the owner does not live in full time is a less certain security, in condition, in occupancy and in resale. The lower loan to value is how that is reflected.
Is the main residence at risk?
No. The loan is secured on the second property only.
Request information
Ask us about the Second Home Options
The form reaches an underwriter in Dublin. If you are an intermediary, say so and we will route it to the broker desk.