For many, owning a second home is about more than investment—it’s about lifestyle. Whether it’s a cottage tucked into the countryside or a coastal retreat for family getaways, a second home offers personal value that goes beyond bricks and mortar. But financing one isn’t always straightforward.
In this article, we explore how second home mortgages work, why some lenders are cautious, and how Orton Financial is helping clients borrow up to 85% loan-to-value (LTV) on an interest-only basis—or even 90% on a repayment basis
What is a second home?
A second home is typically a property used by you or a close family member—not rented out commercially or used as a holiday let. It might be:
- A weekend escape in the Cotswolds
- A seaside flat in Cornwall
- A rural farmhouse near family
Because it’s not your primary residence, lenders treat second homes differently. And that can mean more hoops to jump through.
Why are second home mortgages tricky?
Many lenders are cautious about second homes. They worry about:
- Vacancy risk: Properties not lived in full-time may be harder to maintain or sell.
- Affordability: Borrowers must prove they can afford two homes.
- Usage ambiguity: If the property is let out, it may fall under buy-to-let rules.
As a result, second home mortgages often come with:
- Lower LTV limits (typically 75–80%)
- Limited interest-only options
- Tighter underwriting criteria
Our lending solution: Up to 85% interest-only
At Orton Financial, we specialise in bespoke lending solutions for clients with complex needs. We’re able to arrange:
- Up to 85% LTV on an interest-only basis
- Up to 90% LTV on a capital repayment basis
This is significantly more flexible than what’s typically available on the high street. It allows clients to preserve liquidity, reduce monthly outgoings, and retain control over their financial strategy.
Why choose interest-only?
Interest-only mortgages aren’t just for investors. For second homes, they offer:
- Lower monthly payments: You only pay the interest, not the capital.
- Cash flow flexibility: Ideal for those with variable income or other investments.
- Strategic planning: Useful if you expect a future liquidity event (e.g. sale of assets, bonus, inheritance).
This structure is particularly attractive to high-net-worth individuals or those with strong asset bases.
Example scenario
Imagine a client purchasing a £600,000 coastal home for family use. With our solution:
- They could borrow £510,000 (85%) on an interest-only basis.
- Monthly payments would be significantly lower than a repayment mortgage.
- They retain flexibility to repay capital later, perhaps after selling another property or receiving a lump sum.
Key considerations
Before applying, it’s important to understand:
- Usage must be personal or for close family—not commercial letting.
- Location matters: Some lenders prefer properties in established residential areas.
- Broker expertise is crucial: Navigating lender criteria and structuring the deal correctly makes all the difference.
Conclusion
Second homes are a lifestyle choice—but they don’t need to be a financial burden. With the right advice and access to specialist lenders, it’s possible to borrow up to 85% interest-only, or 90% on repayment terms.
If you’re considering a second home and want to explore your options, speak to a broker who understands the nuances of this market. At Orton Financial, we’re here to help.