It is a dream for many people – owning a second home, often in a place with happy associations and memories. However, the main reason that second homes are a badge of affluence, and are often owned by older people, is that they can be extremely expensive, both to buy and maintain. Currently there are thought to be about 250,000 second homes in England and Wales.

In popular areas such as the Norfolk coast, estate agents estimate that 75% of their customers are people wanting second homes, with the demand driving prices up by about 30% in the past two years. For a property you are not intending to use fully, this is a steep premium to pay.

Here are some areas to consider if you're thinking of buying a second home.

Mortgage

You'll have to pay the valuation fee, the booking fee and probably an arrangement fee as well as the actual cost of the repayments.

According to figures released at the start of 2001 by lender Paragon Mortgages, average mortgage loans for second homes have risen from approximately £45,000 to over £60,000 in the last two years. These are large amounts of money to pay back on top of a first mortgage.

According to Paragon's figures, this represents a rise in the average value of holiday homes to around £90,000.

Legal costs

The purchase of a second home will obviously incur legal costs, including stamp duty on the purchase of properties over £60,000, land registry fees and various search fees.

Insurance

You'll clearly need buildings insurance, and will probably want contents insurance, which is recommended, but not compulsory.

Maintenance

If you intend to be away from the second home for long periods of time, you'll need someone to keep an eye on the place regularly, to make sure it's secure, and to do any maintenance that might be needed. You'll probably also need a gardener to keep the grounds tidy and under control, unless you want to spend all your time at the property gardening. Both of these are extra but unavoidable costs that need to be factored in.

Furniture

It may seem obvious, but for a second home one needs a second set of furniture, as well as cutlery, a cooker, fridge, television, carpets, linen and so forth. Buying and maintaining these will be twice as expensive as it would be for one home.

Vehicles

If the second home is a long way from your main residence, you might choose to get there by air or rail, and keep a second car at the home. Obviously this can be expensive, and if the vehicle isn't run regularly, maintenance costs can be higher. Insurance, if the car is garaged and is kept in the rural area and not in a city, can be cheaper though.

Security

If the property is regularly left uninhabited for long periods of time, insurance companies might insist on extra security measures to prevent theft and damage. These measures, which can be expensive, can include heavy-duty steel or aluminium shutters and locks and burglar alarm systems, which are not only expensive but will need full-time monitoring, so incurring ongoing costs.

Any property that has stood empty for some time is a potential target for squatters, who can be an expensive and time-consuming problem.

One of the biggest problems with squatting is that it is not technically a crime, but is treated by courts as trespass. This means a squatter can't be arrested for occupying a property. And once in, a squatter can defend their rights to live there, which can make eviction a messy and prolonged affair.

Utilities

You'll need to pay quarterly standing charges for gas, electricity, the telephone and the television license fee, even if you're not using them all the time. These add up over time.

Council tax

With the council tax system, you pay only 50% of the tax due on the house which is not the main residence. (In Wales, where there are a large number of holiday homes, the figure is only 25%.) The local authority will decide which it thinks is the main residence, although you can appeal against this.

However, the Liberal Democrat Party last year stoked the debate on second homes by publishing a discussion document calling for an end to 50% council tax on them. They argued that councils should be able to force people buying houses they were not going to live in all the time to ask for special planning permission. The document said the "increased immigration of wealthy and more affluent people" had forced house prices up and cut the amount of affordable housing to local people.

Such a change in council tax structures could bring a county like Cornwall an extra £5 million for education and social services, so there are many who would like to see changes.