Holiday Let Mortgages

If you are looking to holiday let a property as a business, then you will need a holiday let mortgage. Just in the same way as if you were buying an investment property to let out (on an assured shorhold tenncy agreement), you would need a buy to let mortgage.

If you are intending to use it as a second home / holiday home and not let it, then a second home mortgage will be more apropriate. However even then, some lenders will be okay with you letting it for a rstricted period of time.

If you are intending to move out of your residential home and holiday let your property you should do one of two things, depedning whatby9ur plans are:

1. If you are moving out permanaently, then you will need to change your mortgage from a residneitl mortgage to a holiday let mortgage.

2. If you are moving out of your home for a short time to let your property out but you intend to move back in, then you should contact your existing lender to get permission to let while you are renting the property. Most lenders are okay with this, but its important to always inform your lender if there is any change in use. Tip; to avoid any issues, always speak to the lender before you do anything and ask to see how they will view your plans before you go ahead and do it.

Get in touch with a lender who specialises in holiday let mortgages. Most lenders who lend on buy to lets do not touch holiday lets at the moment, but this could change. Or you could get in touch with an independent mortgage broker who specialise in holiday let mortgages like us. Every lender is slightly different in terms of their lending criteria so what might be okay for one, might not be for another lender. Getting a holiday let mortgage is not easy and unless you have lots of time on your hands you could easily make costly mistakes.

Holiday let lenders will assess you as much as the property you are looking to buy. Typical things a lender will look at are:

• A minimum personal income is usually required and can vary from £20,000 too £40,000. However there are some lenders who do not have a minimum income requirement, but they will want to make sure that you can financially support yourself without relying on a holiday rental income.
• A holiday let deposit is nearly always at least 25% of the purchase price. However because the borrowing amount is dependent on the rental figure, if the rent is not enough, then a larger deposit will be required.
• Some lenders will allow you to purchase through a Ltd company, while others won’t. If you want to go through a ltd company you will be restricting your choice of lenders.
• Location can be a restriction when it comes to getting a holiday let mortgage. Some lenders will only lend in certain areas and will tend to avoid non-mainland UK. Some lenders also avoid lending in Scotland.
• The amount you can borrow does vary from lender to lender, but try our holiday let mortgage calculator below to get an idea. However to be really accurate and to take your whole circumstance into account, we always recommend speaking to one of our experienced holiday let mortgage brokers.
• If there is any kind of restriction on the property i.e it can only be used for a second home or holiday home, then the likelihood is a lender won’t lend. However there are some lenders that are okay with this, but the options, availability, and difficulty are increased.
• Lenders don’t like properties on holiday parks so as a rule of thumb it will be a no. However, if a surveyor can confirm the saleability won’t be affected by it being on a holiday park, then this could be okay, but it will likely need a much bigger deposit of at least 40-50% of the purchase price.  With this, they are usually looking for smaller and unique holiday parks.
• Your overall level of indebtedness is also taken into account when a lender is considering you.

But don’t forget, there are many other elements of holiday let lending criteria, such as an applicant age, the valuation of the property, the borrowing amount and the level of experience you have.

Whatever you do, don’t think that this is a definitive list. Every lender has different rules and criteria and it can get quite granular. 

The other really important thing to remember is that the rules of the game change. Holiday let lending crtiteria, just like any other type of mortgage criteria, changes. So just becuase something was possible, doesn’t mean it will be in the future. Or vice versa!