Buy to Let Holiday Let Mortgage advice
Seeking a holiday let mortgage ? – Are you considering ‘dipping a toe’ into the seaside or vacation rental market in the UK? Or perhaps you’re looking to expand your property portfolio with a holiday let? If so, you’ll likely need a holiday let mortgage, a specific financial product tailored for properties rented out on a short-term basis. In this comprehensive guide, we delve into the intricacies of holiday let mortgages in the UK, covering everything you need to know to make informed decisions.
Finding a mortgage can be more difficult than you might think. Many lenders have additional criteria when it comes to a holiday let or Air BnB style property.
Do you already run a holiday let business? We can help you remortgage if you wish to refinance your property. We will also finance multiple holiday let properties as your business grows.
Typical deals:
- Max borrowing 75%
- Borrowing in personal names or through a limited company SPV*
- Maximum of 6 x investment properties on completion of new loan
- Property has less than 4 properties on one title. ( we can look at MUFB for 5+ apts on one title )
- Property has less than 9 bedrooms per property and less than 5 acres of land*
What is a Holiday Let Mortgage?
Understanding Holiday Let Mortgages
Holiday let mortgages differ from standard residential or buy-to-let mortgages. They are designed for properties rented out for short periods, often to tourists or holidaymakers. With the growth of platforms like Airbnb and Booking.com, the market for holiday lets in the UK has seen a significant increase, making holiday let mortgages an essential financial tool for many property investors.
You can use a holiday let mortgage to buy a holiday home that you plan to let out to tourists and visitors on a short-term basis.
Eligibility for a Holiday Let Mortgage
Eligibility criteria for these mortgages vary among lenders. However, typically, you’ll need to prove that the property is suitable for holiday letting (e.g., it’s in a desirable location), you have a solid business plan, and your income can cover mortgage payments during off-peak seasons.
With fluctuations in seasonal rental income, because the rent you’ll receive will go up and down depending on the season and number of bookings, mortgage lenders see this type of property as having a greater risk so deals will be higher compared to residential mortgages. Equally the criteria for taking out a holiday let mortgage can be stricter than a buy-to-let mortgage.
Although the number of holiday let mortgages available can be limited, the increasing popularity of staycations means the range of lending options is growing for this market.
Call us to Discuss your Holiday Let
Pros and Cons of Holiday Let Mortgages
Like any investment, holiday let mortgages come with their own set of advantages and disadvantages. On the plus side, they offer potentially higher rental yields than traditional buy-to-let properties due to higher short-term rental rates. Plus, holiday let properties can also benefit from tax advantages.
However, the flipside includes potential periods of vacancy, especially during off-peak seasons, and potentially higher deals compared to standard mortgages.
Air BnB / Holiday Let Mortgage FAQ's?
How Much Can I borrow ?
On a holiday let you are realistically looking at between 60% – 75%, of the property value. Meaning you will need typically 25% – 30% deposit. Also dont forget to allow for Stamp Duty and legal fee’s.
The lender will also look into whether the property can provide a rental income of 125%-145% of the interest payable on the mortgage. You will also be required to show you can keep up with the payments during the periods the property is not let.
Property is above Commercial ?
Ok where the Holiday let is above a commercial property eg a shop or restaurant, it basically comes down to what the commercial activity is.
If it’s a Chinese or Indian take-away, then the chances are it won’t be acceptable ( but who wants to smell like a take- away all holiday ? )
If its above a retail shop, hairdressers etc then we should be able to get it placed with a lender.
The most suitable thing is send us the street screenshot / picture and tell us which property it is.
Holiday let for First time Landlord ?
OK, many lenders want landlords of holiday lets to have some experience on standard normal Buy To Let properties first.
There are a few lenders that will consider first time landlords on holiday lets – ask for details.
Can you access all lenders?
Yes, we have whole of market access. As we are an impartial brokerage, and not tied directly to a group of lenders, We are good at helping people choose the right mortgage from lots of different options. We search for the most suitable options for each person that suit their individual financial situations.
Are you a lender ?
No we are a mortgage advice practice. So we are not tied to any one lenders dels or criteria. We can assess your case across all the lenders we work with. and find the most suitable match.
Why bother with mortgage advice?
Well legally you dont have to use an advisor to help you find a mortgage. – although some lenders are ‘intermediary only’ meaning they actually dont deal direct with the public.
But the biggest reason to use an advisor is to hand over some of the stress and hassle. You could go shopping to each of 20 lenders .. spend an hour or two, with each of their advisors and see if they say “yes we can lend ” or ” sorry computer says no “ , after 5 or 6 attempts you might strike it lucky and not have to go through the rest of the 20 lenders…. but did you get ‘the most suitable deal’ or did you just settle as you didnt have time to go through all 20 lenders ( ps we have way more than 20 lenders ! at last count it was nearer 100 ! )
ps we dont actually trudge to each lender, we have sophisticated proprietary software that shows us all lenders deals and filters against criteria for both property and applicant.
Talk to a specialist
Let us help you, talk to an expert mortgage advisor about your holiday let mortgage needs and benefit from their expertise in finding you a great deal.
One Tailored recomendation
Let us help you, with tough additional criteria for these types of mortgages . Let us help you find a lender that WILL LEND on your chosen property, at the most suitable rate for your circumstances
Advice & Guidance
Every step of the way, from initial enquiry, through to meeting lenders criteria, the application and through to completion. we will be at your side
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How to Apply for a Holiday Let Mortgage:
The application process for a holiday let mortgage is similar to other mortgage types. You’ll need to provide your personal and financial details, information about the property, and proof of income. Remember, lenders will assess your ability to make repayments during off-peak seasons, so having a robust business plan is crucial.
Top Lenders for Holiday Let Mortgages:
Several lenders offer holiday let mortgages in the UK. These include high-street banks such as Barclays and Leeds Building Society, as well as specialist lenders like Cumberland Building Society and Furness Building Society. It’s valuable to shop around or work with a mortgage broker to find the most suitable deals.
Legal and Regulatory Considerations:
Before investing in a holiday let, check local regulations and planning permissions. You may need to obtain a ‘change of use’ planning permission if your property isn’t already classified as a holiday let. Additionally, holiday let properties in the UK are subject to Business Rates rather than Council Tax.
Conclusion:
Investing in a holiday let can be a lucrative venture, yet it requires careful planning, particularly when it comes to financing. By understanding the ins and outs of holiday let mortgages in the UK, you can better navigate this complex landscape. As always, consider seeking professional advice to ensure you’re making the most suitable decisions for your financial future.
Remember, a holiday let mortgage isn’t the only way to finance a holiday let, but it is a popular choice due to its flexibility and potential returns. With the right approach, your holiday let could become not just a profitable investment but also a relaxing retreat for holidaymakers across the UK.
Please note that this article is intended to provide a general understanding of holiday let mortgages in the UK. It is not intended as legal, financial, or professional advice. Always consult with a qualified professional before making any financial decisions.
Disclaimer: The information in this article is accurate as of the publish date. However, the mortgage market is subject to frequent changes, so always check with a mortgage advisor or lender for the most current information.