HOLIDAY LET MORTGAGE / HOLIDAY HOME MORTGAGE
Buying a holiday home or a property to use as a holiday rental home can be a worthy investment, however there are several factors to consider when looking for a mortgage.
Harris Begley are one of Cornwall’s leading mortgage brokers and in a county with the highest number of holiday homes in the UK, not surprisingly we have extensive experience in the holiday let lending market. There is a very limited number of Holiday Let mortgage lenders and we work with these lenders on a day to day basis. We offer a free, no obligation initial consultation to discuss your mortgage requirement. Get in touch on Tel 01736 366550 or email firstname.lastname@example.org
What is the difference between a Second/Holiday Home and a Holiday Let?
A holiday home is likely to be unoccupied for a large portion of the year between your visits. You may come and go for your holidays, but you will not have visitors staying there who are paying you rent.
A holiday let property is usually an investment, allowing you to own a home that will be used throughout the year by tourists. You will be responsible for attracting regular guests to secure your rental income throughout the year and maintaining the property and furnishings to an acceptable standard for your visitors.
Second/Holiday Home Mortgage
Technically a holiday home is classed as a second home and if you are not planning to rent out the holiday home, you can apply for a standard mortgage for a second home.
If you are already paying for a mortgage on a property, getting another mortgage, which is often called a second home mortgage, can be subject to tighter lending rules and affordability assessments to ensure you can keep up with two mortgage repayments.
Holiday Let Mortgage versus Buy To Let Mortgage
Unlike a typical buy to let mortage property, holiday lets usually have multiple occupants throughout the year, each staying for a short period of time for their holidays.
Many of the high street banks and building societies do not offer mortgages for holiday lets, even if they offer standard buy to let mortgages, as holiday let mortgages represent a different type of risk. This is because there is no guarantee that the holiday property will have guests renting it all year round, due to peak season and low season fluctuations. As a result your monthly rental income is unlikely to be consistent month to month, whereas, with a standard buy to let mortgage, you usually only need to find one tenant who will commit to a monthly rental for a twelve month tenancy period.
A longer term tenancy provides more assurance to the lender that you would be able to repay the monthly mortgage repayments, hence Holiday Let mortgages are subject to additional checks by the lender to assess the holiday letting market in the area of the property in terms of how many weeks of the year you can expect to let the property and the average rental rates to ensure you can keep up with repayments. To safeguard against this risk, the lender may require a larger deposit than with a standard mortgage and typically this is around 25% of the property value.
Releasing Equity To Raise Your Deposit
If a 25% deposit is higher than you had anticipated, you may consider remortgaging your current property to raise this deposit. For example, if your home has increased in value and you have paid off a large part of the mortgage, you may be able to release equity to raise the money for your deposit for a second home mortgage. Bear in mind, many of the Holiday Let mortgage providers will still expect you to have a sizeable income from your salary or elsewhere in addition to the rental income generated by your Holiday Let property. If you are already paying a mortgage in addition to the one you hope to take out for a holiday home, this will be a contributing factor in how much you are allowed to borrow.
How Can Harris Begley Help You?
We offer a free, no obligation initial consultation to discuss your mortgage requirements and we will source and supply a mortgage quote for your holiday let without charge, plus where required, a quote to remortgage your current property without charge. After your free of charge consultation, if you confirm that you are happy to proceed with the mortgage quote supplied, you will be subject to a mortgage arrangement fee of £495, which is payable at the mortgage application stage.
Our dedicated administration team are available 9am-5pm weekdays either by phone or email, so you can easily contact the person managing your mortgage application to ensure a fast, smooth process. To book your free, no obligation initial appointment, please contact Harris Begley on Tel 01736 366550 or email email@example.com
Buying a Holiday Let property is an investment that requires considerable commitment and it makes sense to insure your property investment against accidental damage and abuse – read more on our Landlord’s Insurance page.
Finally, if you run your holiday let as a business, it is advisable to speak to your accountant as you may be eligible for tax relief.
Commercial mortgages and buy to let mortgages and auto enrolment are not regulated by the FCA.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.