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Second mortgage calculator

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Oct 18, 2022

Second mortgage calculator

You can estimate how much you could borrow, view your mortgage rates, and compare monthly payments with an online mortgage calculator or mortgage affordability calculator and the best bit is there are no credit checks, and it is free to use.

The cost of your home determines your monthly mortgage payments, the loan duration, your down payment, homeowner’s insurance, property taxes, and the loan’s interest rate (which is highly dependent on your credit score – s0 be sure to be up to date on debts and payments).

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What is a mortgage calculator?

In simple terms, a mortgage calculator is used by lenders and mortgage brokers to calculate how much money you can borrow. Mortgage calculators can also indicate the number of total mortgage repayments.

Mortgage applicants can use these tools, but all lenders will use their calculators based on their in-house needs. Since you also have access to this tool and can use it to see what you are getting yourself into before making any commitments. Getting a vision of your finances and expenses is always a good idea.

You can find this helpful tool on online mortgage websites or UK lenders’ sites. A calculator will only give you a rough estimation, so do not take it as an official amount.

The calculator can estimate how much you can borrow, what the interest rates will be, and what potential rates are available to you. However, every lender has its own deals and offers, so it isn’t easy to get an exact amount.

The calculator is not the be-all and end-all, but it can give you an idea of which mortgage options are best and how to move forward with your application.

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Things to calculate if you are thinking about a 2nd home mortgage

Interest rates

Using a second home mortgage calculator, you can estimate the interest you’ll pay. The majority of these calculators let you enter your own rates.

How much can you borrow?

Mortgage providers complete an affordability assessment as part of the mortgage application process before verifying how much you can borrow. There are estimating calculators online to help you get a general idea of how much you’ll be able to borrow.

The lender uses their in-house calculator to determine how much you will need based on a multiple of your salary. Most lenders calculate this using 4.5 times your salary; some may even go as high as five times.

There are circumstances where lenders may go even higher than this, but it is infrequent and only in specific cases.

The main difference between second and primary mortgage financing is that for a lender to be confident that you can afford both, they will also consider your primary mortgage’s cost.


We already know that the deposit for a second mortgage is much higher than that of an existing mortgage – generally about 25%, to satisfy the lender’s internal affordability criteria.

Lenders often examine how much equity you have in your primary house when evaluating your request for a second mortgage. You will find that some lenders will want to see 15-20% equity in your primary residence.

But as long as you have a deposit of 10-15% ready for your second property, most lenders will not be that concerned about the equity value of your primary residence.

Some lenders might even let you utilize the equity in your primary residence to pay the deposit needed for a second home mortgage if you have enough equity.

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Second mortgages and when you’d need one

A second mortgage is a loan secured on your property from a new source or someone other than your original lender. The second lender always takes priority over the first lender. With a second mortgage, you can utilize any home equity you have as collateral for another loan, implying that your home will have two mortgages.

A second mortgage can take two forms. There is the fixed-rate home equity loan. In this case, you will receive a large amount of money, or there is the home equity line of credit or HELOC. This loan works just like a credit card, and you will be able to draw money when it is needed.

You may want to take out a second mortgage for a number of reasons. The following are some circumstances where a second mortgage will come in handy:

  • Instead of remortgaging to release equity from your house if your present mortgage has a hefty early repayment fee, it can be less expensive for you to take out a second charge mortgage. You may save more money in the long run.
  • Remortgaging to a new mortgage to pay off your house loan and a second loan may mean a higher interest rate on the entire new mortgage. This results in paying more interest overall, especially if your credit has worsened since you took out your first mortgage. You would only be required to pay the higher rate and additional interest on the extra amount if you took out a second mortgage.
  • You would only be required to pay the higher rate and additional interest on the additional amount you wish to borrow if you took out a second mortgage.

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Best online mortgage calculators

It’s convenient to use an online calculator to estimate how much you may be able to borrow, but don’t rely entirely on a mortgage calculator when planning to purchase a second house.

You can obtain trustworthy and accurate information by consulting a competent whole-of-market mortgage advisor, from which they can make plans for a home you can afford. The calculator only gives you an estimate; you will still need to consult with someone and weigh several other factors.


What your lender will look for

Lenders will scrutinize your mortgage application more closely if you’re planning to utilize it to purchase a second house. A lender wants to be sure that getting a second mortgage won’t affect your ability to pay back your first one and vice versa.

When calculating how much you might borrow for a second property using an online mortgage calculator, the majority of lenders require the following information:

  • The size of your deposit.
  • What you will be using the property for.
  • The mortgage term.
  • The purchase price of that second property.
  • Your income and expenses.
  • How far the second property is from your primary residence

Online lenders’ calculators are set up in accordance with their internal affordability standards, so you have some indication of their suitability.

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Pros and cons of a second mortgage


  • You have easy access to money with a low interest rate. Depending on your credit history and current interest rate trends, lending institutions typically provide second mortgages at excellent rates.
  • The interest may even be tax deductible.
  • The closing costs of a second mortgage are generally low, and you can use the funds for anything you like, including debt reduction, home renovations, college expenses, and even vacations.
  • You could get access to a large amount of credit.
  • They are widely available.


  • Borrowers tend to lend more than needed, and this can be very problematic if interest rates increase or if you decide to move and you may end up owing way more than your home is worth.
  • Interest payments will rise the minute interest rates go up.
  • You may have to wait longer to purchase the property outright if you take out a loan against your home equity,
  • If you do not repay your loan, there is a high chance that you could lose your house.
  • Having home equity does not guarantee you a second mortgage. Applications go through a stringent review process.

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Do you need 20% for a second mortgage?

If you have a higher debt-to-income ratio or your credit score is very low, mortgage lenders may require a deposit of 20% for a second property.

Is a second mortgage more expensive?

Yes, it generally is, as interest rates are usually much higher.

What’s the difference between a HELOC and a second mortgage?

A second mortgage has a fixed term and monthly payments to be paid in one lump sum at the start of the loan. A HELOC is a type of revolving credit allowing you to borrow up to a particular amount and pay back only the amount you’ve already borrowed each month.

Does a second mortgage affect your credit score?

While looking for a mortgage, hard queries will lower your credit score, and your credit score will momentarily decline as a result of a first mortgage, mortgage refinances, or the second mortgage that has been finalized. If you pay for everything on time, your score will go up again within a year.


Calculating a second mortgage – Final thoughts

A second mortgage can be beneficial for some buyers and unnecessary for others, as it may only be more of a financial burden. It is all dependent on personal circumstances. A mortgage calculator can help you determine how much your loan will cost and if you can afford it.

You must consider all factors in your personal life and get help from a mortgage provider so you can get an idea of the mortgage rates and look at which mortgage options would suit your needs.

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