Last reviewed: June 2026
TL;DR- A second home mortgage is a residential mortgage on a property the buyer does not occupy as their main home.
- Affordability is assessed on personal income with the existing primary mortgage as a committed outgoing.
- The additional dwelling SDLT surcharge applies on second home purchases in England.
- When the second home is sold, capital gains tax may apply to any gain above the annual exempt amount, as private residence relief does not apply to a property that was not the main home.
Second Home Mortgages and How They Differ from Primary Mortgages
A second home mortgage applies to a residential property that will not be the borrower's main home. The property may be a holiday home, a home near a workplace used during the working week, a property for an elderly relative, or a property the borrower plans to live in eventually. Unlike a buy-to-let mortgage, the property is not let to commercial tenants - it is for personal or family use.
Affordability is assessed on personal income, with the existing primary residence mortgage treated as a committed outgoing. The lender assesses whether the borrower can afford both mortgages simultaneously from their income. This is more restrictive than a standalone assessment and typically reduces the maximum amount available on the second home.
Stamp Duty on Second Homes
Purchasing a second home in England triggers the additional dwelling SDLT surcharge. This applies whenever a buyer completes on a residential property when they already own another residential property anywhere in the world. The surcharge applies even if the second property is not bought as an investment. Current rates and thresholds are on the GOV.UK SDLT calculator - the applicable surcharge rate should be confirmed before exchange of contracts.
If the buyer sells their primary residence within three years of purchasing the second home, a refund of the surcharge may be available. This applies where the second home was intended to replace the primary residence but the primary residence was not sold before the second home was purchased.
Capital Gains Tax on Sale
When a second home is sold, capital gains tax (CGT) applies to any gain made during the ownership period. Private residence relief (PRR) - which exempts the main home from CGT - does not apply to a property that was not designated as the main home throughout the ownership period. The final nine months of ownership are exempt from CGT regardless of use. CGT on residential property is charged at rates set by HMRC - currently higher than the main CGT rates for other assets. The gain must be reported and tax paid within 60 days of completion of the sale.
Nominating a Main Residence for CGT
Where a person owns two properties, they can elect which is their main home for CGT purposes. An election must be made within two years of acquiring the second property. Strategic use of main home elections can reduce CGT on the eventual sale of one or both properties. This requires careful planning and specialist tax advice, as the rules around elections and the interaction with SDLT are complex.
Frequently Asked Questions
Can I let my second home occasionally without needing a BTL mortgage?
Most residential mortgage terms permit occasional letting to friends or family, but not commercial short-term letting. Listing the second home on commercial platforms would typically breach the mortgage terms. Borrowers who want to let the second home commercially need either a holiday let mortgage product or explicit consent from their lender. Consent to let for periods while the owner is not using the property may be available from some lenders.
What is the maximum LTV for a second home mortgage?
Maximum LTV on second home mortgages is typically 75-85%, requiring a deposit of 15-25%. The lower maximum LTV compared with primary residence mortgages reflects the higher risk to the lender if the borrower's finances are under pressure and the second home is the lower priority commitment. Standard 90-95% LTV products are generally not available for second home purchases.
Can I use a Help to Buy scheme to purchase a second home?
No. Government-backed home purchase schemes (Help to Buy equity loan, shared ownership, First Homes) are all restricted to first home or primary residence purchases. Second home buyers do not qualify for any of the government first-time buyer or affordability schemes.
If I move into my second home as my main residence, what happens to the mortgage?
If the second home becomes the primary residence, the borrower should notify the lender. The mortgage product does not automatically change, but the property's status as the main home may affect CGT treatment if it is subsequently sold. If the former primary residence is sold, the borrower owns only one property and the former second home becomes the sole residence. The tax position at the point of the various transitions should be reviewed with a tax adviser.
