Finding a mortgage for a holiday let to rent out can sometimes be complex, but our team of mortgage specialists are here to help. Whether you’re in the early stages of considering buying a holiday let or you’ve found the perfect property and you’re looking for holiday let mortgages, our experts will help secure the right deal for your circumstances.
Holiday Let mortgage help
There are a few things to understand before we get started.
There are several differences to note. Firstly, holiday lets are categorised as businesses rather than investments, leading to different tax implications compared to long-term tenant rentals.
Also, due to the seasonal nature of holiday lets, lenders typically see them as higher risk compared to traditional tenant rentals. Therefore, when purchasing a holiday let, mortgage lenders often require a minimum deposit of 25%. Additionally, they may request proof of income to ensure your able to meet repayments, especially if rental income falls short.
To purchase a holiday property, you’ll require a specialised mortgage product. While holiday let mortgages are considered niche products, many mainstream lenders do offer them.
Before starting the search for your ideal holiday let property, it’s important to consider the additional expenses and obligations you’ll be taking on.
Similar to purchasing a standard rental property, buying a holiday let means assuming the role of a landlord. This includes responsibilities such as conducting safety assessments including fire safety, gas, and electrical checks. Additionally, you’ll need to furnish the property, maintain the garden, redecorate as needed, and ensure the replacement of any damaged items.
So, it’s essential to tally up both the larger and smaller costs when working out your affordability.
Keep reading to find information on the holiday let process and for answers to some of your main FAQ’s.
You can also learn about the different types of mortgages and interest rates in our guide.
Holiday Let: Frequently Asked Questions
Just like with any mortgage type, we would always encourage for you to speak with a mortgage broker, such as ourselves. We can help you in understand what you will need for your mortgage application and compare products from various holiday let mortgage lenders to find the most suitable deal for you.
Once you’ve gathered your documentation, it’s a matter of submitting your mortgage application. Throughout this process, we’ll provide full guidance and support, ensuring a smooth journey from beginning to end.
Like any other mortgage, the structure of your repayment plan will depend on the type of mortgage you’ve selected. Opting for a fixed-rate mortgage means your payments remain consistent throughout the fixed rate term, which typically ranges from 2 to 10 years.
On the other hand, with a variable rate mortgage, your monthly payments may fluctuate based on interest rates. It’s important to decide whether you prefer the stability of fixed payments, even if they might incur higher costs over time, or if you’re comfortable with the variability of payments, especially when rental income might not be steady.
If you’ve opted for an interest-only holiday let mortgage, you’ll solely pay the interest each month, with the entire mortgage amount due at the end of the term.
To secure the most suitable holiday let mortgage interest rates, it’s advisable to save up a larger deposit. Although a minimum of 25% of the property’s value is typically required from lenders.
With the current boom in popularity of UK holidays, the competition among holiday lets is intensifying. Therefore, it’s important to make sure that your property stands out from the rest.
1. Location is key: Investing in a property situated in a sought-after holiday destination such as a seaside resort or picturesque countryside location increases the likelihood of attracting guests.
2. Create the right ambiance: The decor of your property should strike a balance between comfort and style, as this can sway potential guests to choose your property over others.
3. Strategic marketing: Consider how you will promote your holiday let. Professional photography, a dedicated website, and advertising campaigns can all increase visibility, but remember that these strategies can come with associated costs.
Important information
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount will depend upon your circumstances.
The fee is up to 1% but a typical fee is £598.
