Plans > Second Home Lifetime Mortgage

How could second home equity release work for you?

You could release cash from your second home – or raise funds to help purchase a second home

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What is second home equity release?

Last updated: 22nd November 2023

Do you dream of having a second home to escape to? If you have the aspiration but lack the necessary funds, second home equity release could help to make that dream a reality.

Or perhaps you have a second home but would benefit from a cash boost. If so, you could use a lifetime mortgage to access some of your property wealth from one or more of your homes.

When it comes to using equity release on a second home, if you’re a homeowner aged 55+ there are three main ways that equity release could help:

1. Release equity from a second home you own
2. Release equity from your main residence to buy a second home
3. Unlock funds from a second home you’re buying to assist with the cash purchase

This guide to second home equity release looks at achieving these goals through a lifetime mortgage – the most popular form of equity release. Another, much less common option is a home reversion plan.

Find out how much you can release with a lifetime mortgage: check here or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

Did you know?

Even if you have a mortgage on your property, you can still arrange an equity release plan. The only condition is that when the money is paid out, you must clear the mortgage and any other loans secured on the property with your equity release money. Afterwards, the rest of the cash is yours to spend however you choose.

Understanding your options for second home equity release

Equity release has excellent potential as a flexible way to raise tax-free cash when other options are unavailable or unsuitable. Let’s take a look at your three main options for second home equity release.

1. Release equity from a second home you own

We are often asked ‘Can you get equity release on a second home?’ and the short answer is ‘yes’: some lifetime mortgage providers allow homeowners aged 55+ to release equity on a second home. 

According to the English Housing Survey, 2.1 million households had at least one second property in 2021-22. It means around 3% of households in the country have a property portfolio of their own.

The majority of people who own a second home are aged 55 or older: 31% are aged 55-64, while 27% are aged 65 and over. As equity release is only available to people aged 55+, this means that most owners of second homes are potentially eligible for a cash release, subject to other criteria.

Equity release on a second home could therefore be a way to give your finances a welcome boost. It could be a good option if you need money but don’t want to sell your property, remortgage or arrange an equity release plan on the main family home.

When you arrange equity release on a second home, the money you receive is yours to spend however you choose and is entirely tax-free. If you choose to make voluntary repayments on your loan, you can prevent or reduce interest from building up on the loan. This could be particularly useful for those wishing to protect their loved ones’ inheritance.

There are specialist second home equity release plans available for homeowners wanting to tap into their property wealth. However, they are quite niche and you may actually get a better deal with one of the many great offers regularly available on standard plans.

2. Release equity to buy a second home using your main residence

If you’re thinking about buying a second home but don’t have enough money to complete the purchase, you can look at releasing equity to buy your second home. You can raise the funds you need from your main UK residence to put a deposit down on a second home, or buy one outright.

Many people in or approaching retirement dream of owning a second home to make the most of their golden years. Maybe you would like a coastal cottage for whiling away the summer months, or a city apartment to bring you closer to your family. Arranging equity release to buy another property could make your dream a reality. 

If you decide to do equity release to buy another home, then unless you choose to make voluntary payments to service the interest, there are no monthly repayments to make. Instead, the loan plus interest is rolled-up on a compound basis and only repaid once that property is sold, usually when you pass away or move into long-term care.

Make sure you speak to our selected advisers if you want to release equity to buy another house. They can provide all the information and quotations you need, and expertly guide you through the process.

3. Unlock funds from a second home you’re buying to assist with the cash purchase

Your third option is to arrange equity release on a second home, while in the process of buying it.

Say you have a second home in mind and wish to purchase it without arranging a regular mortgage. Our selected advisers could help you to unlock some of the money you need from a house you don’t own yet, in order to buy it.

Perhaps you don’t want the hassle or commitment of monthly mortgage repayments, or you might have a poor credit history and worry that you’ll be refused a mortgage.

If you’ve already got most of the cash needed to purchase your second home but have a shortfall, speak to our selected advisers today. They can explain everything you need to know about arranging equity release on a second home to help you buy it.

Just remember, you can’t have a regular residential mortgage and a lifetime mortgage on the same house.

Find out more

Whichever of these options is of interest to you, call us today. We will arrange a no-obligation initial appointment with a specialist who can explain everything to you and advise on suitable options. Talk to one of our friendly consultants by calling 0808 178 3055 or if now isn’t ideal, request a call back and we’ll call when it’s convenient for you.

Second home ownership: the facts

If you’re thinking about purchasing a second home in later life then you’re certainly not alone. Despite property market fluctuations, ownership of second homes has actually been on the rise over the last decade. 

According to the English Housing Survey, there were 809,000 second homes in England in 2021-22. That’s a 13% increase since 2010-11, when 719,000 second homes were owned.

According to the same data, 90% of people with a second home had just one other home. However, one in ten were lucky enough to own more than one second home.

If you’re thinking about arranging equity release to buy a second home, you might be weighing up whether to buy in the UK or abroad. In 2021-22, 60% (482,000) of second homes were here in the UK, whilst 40% (327,000) were outside the UK. Of those outside of the UK, most are located in Europe. 

When it comes to the privilege of owning a second home there does appear to be a bit of a North-South divide. Out of all the households who own a second home, 48.6% of them are either based in the South East or in London. This compares with 2.4% in the North East and 10.9% in the North West. 

The table below reveals where homeowners with access to one or more second homes were based in 2021-22.

UK second home distribution by location
South East 25.8%
London 22.8%
West Midlands 11.3%
North West 10.9%
East 10%
South West 6.8%
Yorkshire and the Humber 5.8%
East Midlands 4.2%
North East 2.4%

Check your eligibility for second home equity release

Call us on 0808 178 3055 and we’ll arrange a free, no-obligation appointment and lifetime mortgage advice* from a specialist who will confirm whether you are eligible. If you’re unable to talk now, request a call back and we’ll call at a time that suits you.

Check my eligibility

Which companies have lifetime mortgage products?

Thinking about arranging equity release to buy a second home? There are several lifetime mortgage providers to choose from and it may be inconvenient for you to talk to them all individually. To make life easier, Equity Release Wise can arrange a comparison from top providers to help you find the best lifetime mortgage.

Here are some of the leading providers that your search will compare. They are all authorised and regulated by the Financial Conduct Authority and are also members of the Equity Release Council.

aviva logo
canada life logo
just logo
pure retirement logo
crown equity release logo
owl
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Already have a lifetime mortgage?
You could switch for a better deal

Now could be a good time to switch to a different lifetime mortgage. You may be able to release more tax-free cash due to being older than when you took out your existing plan. An increase in your property’s value or being in poorer health could also qualify you for further cash. Interest rate changes may also save thousands over the lifetime of your plan.

Why not arrange a free review* to find out if switching works for you?

Learn more
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Apply for your no-obligation equity release quote

Find out if you qualify for equity release and how much you could borrow. Just click ‘Get started’ or call us on 0808 178 3055 and one of our team will be delighted to help arrange a free consultation and quote*.

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Answering your questions

Still unsure of a few things? We’ve got you covered with answers to some of our most frequently asked questions.

  • Are second home equity release plans available in Scotland, Wales, Northern Ireland and England?

      Yes, lifetime mortgages and other forms of equity release are available across every country in the UK. When you contact Equity Release Wise, we will connect you with our carefully selected advisers who can help you find the best plan for your circumstances.

  • How much can I borrow?

      If you are releasing equity to buy another property or doing equity release on a second home, several factors will determine how much you can borrow. They include the property’s value and how much equity you have in it. Your age will also be considered. You must be 55 or over to qualify, and the older you are, the more you can borrow. 

      The maximum available is typically around 50% of the property’s value for oldest borrowers, with a minimum release of £10,000. If you have certain health issues such as diabetes, high blood pressure or angina, or lifestyle factors such as smoking, you may be eligible for an enhanced lifetime mortgage that may enable you to borrow more money. 

      By asking a few simple questions about you and your property, our selected equity release advisers can provide you with a free quotation detailing the exact amount you could unlock.

  • How long does it take?

      On average equity release plans take around 6-8 weeks to complete. Some straightforward cases can complete more quickly, whilst more complicated cases can sometimes take longer. If you choose to arrange equity release on a second home then your adviser will keep you updated at every stage of the process and will let you know when you can expect to receive your tax-free money.

  • What costs are involved with a lifetime mortgage?

      As with a regular mortgage, there will be costs to consider when setting up a lifetime mortgage. However, any initial advice or information you receive from our selected advisers is completely free and without obligation. This includes guidance on releasing equity to buy another property. Only if you choose to proceed and your case completes will you pay an advice fee.

      Other costs you may need to consider are:

      • The lender’s valuation and arrangement fees 
      • A completion fee (which can be paid at the point of completion or added to your lifetime mortgage)
      • Legal and solicitor fees
      • Early repayment charges

      You will be made aware of all fees by your equity release adviser before you agree to take out a lifetime mortgage.

  • What are the potential risks of a second home lifetime mortgage?

      A lifetime mortgage has worked for thousands of over 55s in need of tax-free cash. But it’s important to understand some potential risks before deciding if it’s right for you:

      • Lifetime mortgage rates are calculated daily and the interest is added to the amount you owe each month. The amount owed therefore increases and reduces any equity left in your home when the plan ends, unless you choose to make interest payments while the plan is running.
      • Taking equity out of your home will mean that the inheritance you leave to loved ones will reduce. Each time you take money from the plan, the level of possible inheritance will reduce.
      • If you give some of the money you release to family as a gift, they may be liable to pay inheritance tax in the future.
      • You may have to pay an early repayment charge if you choose to pay back some of the loan early.
      • Borrowing money and building up your savings through a lifetime mortgage may affect your entitlement to some means-tested state benefits. During your appointment with one of our selected equity release advisers, they will help you establish whether your benefits could be affected.

Other types of equity release

Other forms of equity release may be more suitable for you than a specialist second home lifetime mortgage. Read about these below, or talk about your options to one of our selected advisers so that you can get the best solution for you:

Product lump sum icon

Lump sum lifetime mortgage

Access a tax-free cash lump sum if you’re a homeowner aged 55 or over. You retain full ownership and can stay at home until you pass away or move into long-term care.

Read more about lump sum lifetime mortgage plans
Product interest only icon

Interest-only lifetime mortgage

A more cost-effective method of equity release where you make voluntary interest payments to reduce or prevent compound interest building up.

Discover more about interest-only lifetime mortgage plans
Product enhanced icon

Enhanced lifetime mortgage

Certain health conditions or lifestyle factors could qualify you for higher cash releases or lower interest rates. A simple questionnaire is all that’s needed to check, with no medical examination required.

Read more about enhanced lifetime mortgage plans
Product drawdown icon

Drawdown lifetime mortgage

Instead of making a one-off cash withdrawal, you take an initial cash sum and additional funds as and when you need them. This helps to reduce the total interest you pay.

Learn more about drawdown lifetime mortgage plans
Product home reversion icon

Home reversion

A type of equity release where you sell all or part of your property at less than market value in return for a lump sum, a regular income, or both. You stay in your home rent-free.

Learn more about home reversion

Still have questions?

We hope this information about releasing equity to buy second homes has been useful, but we know that you may need to talk through your circumstances and any unanswered questions. Call us today or request a call back and a friendly equity release consultant will be happy to help.

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+ Client testimonials refer to the service provided by our selected equity release advisers. We have changed the clients’ names and certain identifying information to protect their privacy.

Please note that equity release will involve a home reversion or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care. To fully understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long term care.