A little less than a year ago, the population confined itself to prevent the spread of the coronavirus. And as a result of that quarantine, there were people who realized that they needed an escape valve and who considered the need to buy another residence outside the urban centers. If we are part of that group, we may already be looking for a mortgage for a second home to finance this operation, but before contracting a product of this type, we should take into account several of its particularities.
With a loan for a second residence, they will lend you less money
As a general rule, when the bank finances a second home, it risks more than if it lends the money for the purchase of a habitual residence. And is that if the owner has economic problems, it is more likely that he will stop paying the credit of the property in which he does not normally live because he will care less about losing it.
To better control this risk, entities usually lend less money in these cases. Thus, for a first home, they normally finance up to 80% of the purchase, for a non-habitual residence they generally cover between 60% and 70% of the purchase price.
It must be said, yes, that there are banks that can lend a little more money. For example, with the Variable Orange Mortgage from ING, we can finance up to 75% of the purchase of a home for vacation use, as long as we are clients of the entity. In these cases, this loan has a term of up to 25 years and interest of Euribor plus 1.09% (2.09% the first year) in exchange for direct debiting the payroll and contracting your home and life insurance
These loans usually have a shorter term
Due to this higher risk, most financial institutions also offer a shorter term to return the money, because the shorter it is, the less risk of non-payment there is. In general, loans for non-habitual residents have a maximum repayment period of between 20 and 25 years, while credits for first homes usually have up to 30 years.
A good example of this is Openbank’s Open Variable PHH Mortgage, whose term is up to 25 years if it is used to finance the purchase of a second home (it is 30 years for a first home). This allows you to cover up to 70% of the purchase, with Euribor interest plus 0.95% (1.95% the first year) if your payroll is paid directly into your account and your home insurance is taken out.
The mortgage for a second home may be more expensive
Finally, there are also banks that apply a higher interest on these credits to compensate for the greater risk they assume. In fact, there are even entities that have differentiated offers: one for a first home with a lower rate and another for a second home with a higher interest rate.
It should be noted, however, that there are also entities that do not follow this policy. One of them is Coins, whose Fixed Mortgage has the same interest rate for a first or second home: between 1.25% at 10 years and 1.40% at 30 years. For non-regular housing, with this loan, we can finance up to 60% of the purchase, with a term of up to 30 years.