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Can you use home equity to buy another property?

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GlobalPublished 6 October 2026 · Written by BuyMeWhiskey Editorial Team · How we check facts

Yes. Homeowners can sometimes borrow against existing equity to help fund another property, usually through a remortgage, further advance or second-charge mortgage. The lender will still assess affordability, the security of the existing home, and the full cost of the new borrowing.

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Before borrowing against your home, compare the options and ask a regulated mortgage adviser to explain the full cost and affordability test.

Read FCA mortgage support and affordability guidance

Run your own numbers: Mortgage repayment calculator.

What home equity actually means

Equity is the difference between the current value of your property and the mortgage debt secured against it. It is not automatically cash sitting in an account. To use it for another purchase, you normally need a lender to agree to additional borrowing.

The extra borrowing can be arranged in different ways. A current lender may offer a further advance, you may remortgage and increase the borrowing, or a second-charge mortgage may sit behind your existing mortgage. The right structure depends on your circumstances and lender criteria.

Equity is not the same as affordability

A large amount of equity does not guarantee approval. FCA mortgage guidance says lenders assess income and expenditure and may consider whether payments remain affordable if circumstances change. In its 2026 review of second-charge mortgages, the FCA highlighted concerns where affordability assessments did not adequately include household expenditure.

That is especially relevant when the plan is to keep the first home and add another mortgage. You are taking on a larger total debt while still being exposed to repairs, vacancies, insurance, taxes and other ownership costs across two properties.

Three common ways to release equity

Further advance: your existing lender provides extra borrowing secured against the home.
Remortgage: you replace the existing mortgage with a larger one and use the released cash for the next property, subject to lender rules.
Second charge: a separate loan is secured against the same home without replacing the first mortgage. The FCA says second-charge mortgages typically have higher interest rates than first-charge mortgages.

Do not choose a route simply because the monthly payment looks smaller. Compare the interest rate, arrangement fees, early repayment charges, term and total amount repaid.

The second property's mortgage is a separate test

The property you are buying will normally have its own borrowing and affordability assessment. Whether the lender treats it as a home, second home or buy-to-let depends on the intended use and product. Do not assume that having equity in your first home allows you to bypass the second lender's checks.

If the plan involves renting out the existing or new property, there can be separate lender, tax, insurance and regulatory considerations. The mortgage product has to match what you are actually doing with the property.

Budget for higher Stamp Duty on an additional property

For England and Northern Ireland, HMRC currently applies higher SDLT rates where the purchase leaves you owning more than one residential property, subject to the detailed rules and exceptions. From 1 April 2025, the higher rates are 5% on the first £125,000, 7% on the next £125,000, 10% on the portion from £250,001 to £925,000, 15% on the portion from £925,001 to £1.5 million and 17% above £1.5 million.

That can make the cash required for a second purchase materially larger than the deposit alone. Scotland and Wales use different property taxes, so do not apply the England and Northern Ireland SDLT rates to those purchases.

What if you buy before selling your current home?

If you keep the old home when the new purchase completes, the higher additional-property rates can apply in England and Northern Ireland. If you later sell your previous main residence, HMRC rules can allow a refund of the higher-rate element in qualifying circumstances. The timing and conditions matter, so get the conveyancer to confirm the position before exchange.

The main risks of using equity

Your existing home becomes more heavily encumbered.
Higher rates can increase payments when a deal ends.
Two properties mean two sets of ownership costs.
A fall in property values can reduce your equity cushion.
A second-charge loan can cost more than ordinary mortgage borrowing.

The FCA's 2026 work is a useful reminder that a deal can look affordable because of a lower monthly payment while still costing more overall. Always compare total borrowing costs, not just the monthly figure.

A sensible pre-application checklist

Get an up-to-date estimate of the existing home's value.
Check the current mortgage balance and any early-repayment charge.
Calculate how much usable equity you would need.
Model the combined monthly payments under a higher-rate scenario.
Budget for SDLT or other property taxes, legal costs and transaction costs.
Check the tax and mortgage consequences if either property will be rented.

Illustrative additional-property purchase cash requirement

Worked example

Illustrative purchase: suppose your current home is worth £400,000 and the mortgage is £220,000. Your equity is £400,000 − £220,000 = £180,000. You decide to release £100,000 of that equity and buy another property for £300,000.

New property's illustrative borrowing: £300,000 − £100,000 deposit = £200,000.
Total mortgage debt after the transaction: £220,000 + £200,000 = £420,000, before any extra equity-release borrowing is structured into the first mortgage or second charge.
Illustrative SDLT on £300,000 in England and Northern Ireland: £125,000 × 5% = £6,250; £125,000 × 7% = £8,750; £50,000 × 10% = £5,000; total = £20,000.
Illustrative cash needed beyond the deposit: £100,000 + £20,000 = £120,000, before legal, mortgage and other purchase costs.

The point is not that £100,000 is the right amount to release. It is that equity, deposit, borrowing and transaction tax are four different numbers that need to fit together.

Can I borrow against my house to buy a second home?#

Potentially, yes. A lender may allow further borrowing against your existing home, or you may use a remortgage or second-charge mortgage, but affordability and the lender’s criteria still apply. The borrowing secured on your home remains a real debt even if the new property rises in value.

Can I use home equity as a deposit for another property?#

Yes, released equity can provide cash for the deposit, subject to lender approval and affordability. Remember that releasing equity is additional borrowing, not a free source of cash, so compare the rate, term, fees and total repayment cost before proceeding.

Is a second-charge mortgage a good way to release equity?#

It can be useful when you do not want to replace the first mortgage, but the FCA says second-charge mortgages typically have higher interest rates than first-charge mortgages. Compare it with a further advance or remortgage on total cost, not just the monthly payment.

Will buying another property mean I pay more Stamp Duty?#

In England and Northern Ireland, higher SDLT rates generally apply when a purchase leaves you owning more than one residential property, subject to the detailed rules. From 1 April 2025 the additional-property rates start at 5% on the first £125,000.

Can I buy a new home before selling my old one?#

You can in some circumstances, but keeping the old property when the new one completes can trigger the higher SDLT rates in England and Northern Ireland. A later sale of the previous main residence may qualify for a refund in some cases, subject to HMRC’s conditions and deadlines.

How much equity can I release from my house?#

There is no single universal percentage that every lender will release. The usable amount depends on the property value, existing mortgage, affordability, the intended use of the funds and the lender’s product rules. A mortgage adviser can compare the available routes.

Keep reading

Next question →Do you need your own loss adjuster for subsidence?

Sources

Figures were checked against these sources before publication. If a rule changes, we update the page and show the new date.

General information, not personal financial advice. Rules depend on your circumstances; check the official source or speak to a regulated adviser before acting.