How could second home equity release work for you?

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 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 property 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 another property 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 another property, or buy one outright.

Many people in or approaching retirement dream of owning a holiday 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 property. 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 property in mind and wish to purchase it without arranging a regular home loan. 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 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 you need 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 an equity release plan 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 were owned.

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

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. 

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.