The mortgage for a second home is viable even if the mortgage for the main residence is active. Many people have the option of buying a new apartment without selling the one they already own. If you are one of them and want to know how to manage a second mortgage and its requirements, be sure to read on.
What are the reasons for taking out a mortgage for a second home?
Many times a second home mortgage allows you to obtain another apartment that you will not use as your primary residence, but it will give you the option to:
- An extra income by renting it.
- A good investment if you can later sell it for a better price.
- A place that will serve you to rest or to spend your vacations.
Any of the possibilities will open up new opportunities for you. If you have already decided to purchase a new property, the requirements will be described below.
The requirements for second mortgages are as follows
Almost all the clauses stipulated for a mortgage application, regardless of whether it is a first or a second mortgage, are very similar. However, the second mortgage will have minor variations in terms of:
- Financing. Your payment conditions, monthly income, etc. will always be carefully studied. However, almost every time this funding will be less than the first.
- Time of return. The time period for you to repay the money that is granted to you as a loan is shorter than that of your first mortgage.
For sure, by the time you buy a second home you will be more prepared in terms of money.
The basic requirements for managing second mortgages
The banking institution will demand more detailed requirements, since you will owe not one, but two loans. For that reason they must cover their backs and guarantee that both will be returned in full. Consequently, you will have to provide for them:
Bank statements showing consistent income. Such income must be good enough for both mortgages to be repaid without inconvenience or arrears.
- Apart from the first mortgage, you should not have any other unpaid debts. In addition, the installments of the first mortgage loan must be up to date.
- All your utility bills must be paid. You cannot appear as a defaulter in ASNEF, RAI, etc.
- Consistency of having money saved. Remember that the financing you will be granted will be less than the first time. It is essential that you have started saving before embarking on getting your second home.
Keep these three points in mind. If you have them covered, then do not hesitate and go to the financial institution of your choice to arrange the mortgage for a second home.
What is the required documentation for these cases?
Each bank will give you a list of the documents you will need to provide to apply for a new mortgage. But mostly you will need the ones listed below:
- If you are a native, the NIF. In case of being a foreigner, the NIE.
- Proof of income. The company where you are employed will issue a statement indicating your salary and how long you have been working with them. Also, what is discounted monthly. If you are self-employed, an accountant must certify your income.
- Personal income tax return.
- If you have loans in different financial institutions, the last paid receipts.
- The movements of your other bank accounts. The last six months.
- A summary of your work experience that is up to date.
If there is a person who will serve as your guarantor, he/she must deliver:
- The NIF or NIE as the case may be.
- Proof of income.
- Personal income tax return.
The property must be appraised by a professional appraiser. Depending on the cost issued by the bank, the bank will tell you what amount will be granted. Then, go for your second home.