Barclays has announced a big update to its lending criteria, increasing the maximum Loan-to-Value (LTV) to 90% for applicants who already own another residential property with an existing mortgage. Previously capped at 80% LTV, the new policy applies to both residential purchases and remortgages, giving homeowners and buyers greater flexibility when taking out a second residential mortgage.
What’s Changing at Barclays
Barclays will now lend up to 90% LTV if:
The applicant(s) have an existing background residential mortgage that will not be redeemed on completion.
Standard maximum loan amounts still apply:
- £640,000 for houses
- £310,000 for flats
However, Barclays has confirmed that applicants with “background permission to let”, meaning the existing property is let out with lender consent, will remain capped at 80% LTV.
Understanding Second Residential Mortgages
A second residential mortgage is when you hold more than one residential mortgage at the same time. Common scenarios include:
- Buying a second home such as a holiday property or weekday pied-à-terre.
- Helping a family member onto the property ladder while retaining your current home.
- Upsizing or moving but keeping the first property for personal use (not as a rental).
How a Background Mortgage Affects Affordability
Owning a property with an existing mortgage can impact your ability to borrow because lenders take the ongoing mortgage payments and any related commitments into account. This can reduce your assessed disposable income and therefore the size of loan you can qualify for. Barclays’ decision to lift the maximum LTV to 90% is important because it reduces the size of deposit needed on the second property, making it easier for borrowers with a strong income profile to move forward even while maintaining another mortgage in the background.
Stamp Duty Implications
It’s important to remember that purchasing an additional property in the UK attracts a 3% stamp duty surcharge on top of the standard rate. This applies even if the second home is for personal use and not a buy-to-let.
For example:
On a £400,000 second home purchase, you could pay an extra £12,000 in stamp duty.
Anyone considering a second residential mortgage should budget for these costs and seek professional advice to ensure the investment remains affordable.
What This Means for Borrowers
Barclays’ enhanced 90% LTV criteria give buyers more flexibility to secure a second home with a smaller deposit, remortgage an additional property to release equity or reduce payments, and move home without selling their existing property first.
This is particularly valuable in today’s housing market, where affordability and high deposits can be major hurdles for buyers.
Expert View
Louis Mason, Head of Marketing and Communications at Oportfolio Mortgages, welcomed the change:
“This is a really positive step from Barclays, especially for clients who want to keep their existing home but also purchase or remortgage another property. Increasing the maximum LTV to 90% means borrowers can achieve their plans with a smaller deposit, even when a second mortgage is in place. It’s encouraging to see lenders adapting to meet the needs of today’s more flexible homeowners.”
How Oportfolio Mortgages Can Help
If you’re considering a second residential mortgage or want to understand how Barclays’ new 90% LTV policy could work for you, Oportfolio Mortgages can:
- Compare Barclays with other leading UK lenders.
- Assess how a background mortgage will affect your affordability.
- Guide you through the stamp duty and tax considerations.
- Help you secure the most competitive rate for your circumstances.
Contact our team of expert mortgage advisers today to see how we can help you.
FAQs – Second Residential Mortgages & 90% LTV
Q: What is a second residential mortgage?
A: A second residential mortgage is when you own more than one home and take out another mortgage to purchase or remortgage a second property.
Q: How does having a background mortgage affect borrowing?
A: Lenders factor in the monthly payments on your existing mortgage, which can reduce how much you can borrow on the new property.
Q: What does 90% LTV mean?
A: It means you can borrow up to 90% of the property’s value, needing only a 10% deposit.
Q: Will I pay extra stamp duty on a second home?
Yes, in the UK you typically pay a 3% surcharge on top of the standard stamp duty rates when purchasing an additional property.
Q: Can I rent out my existing home while applying for a second mortgage?
A: Yes, but if you have “permission to let” on the first property, Barclays will cap lending for the new mortgage at 80% LTV.
