Holiday Let Mortgage
The team at Large Mortgage Loans are experts in acquiring the best holiday let mortgages deals for clients across the UK.
What is a holiday let mortgage?
Holiday let mortgages are designed for those wishing to borrow money to buy a property that will be used as a business and let out to tourists and holiday makers on a short-term basis.
This is different from a ‘holiday home mortgage’ when a person borrows money to buy a second home that will be for personal use only – not let out as a business.
It is also not the same as a buy to let mortgage. This is when a person borrows money to buy a property that will be let on a long-term basis as opposed to short term lets of just a few days or weeks at a time.
Do I need a buy to let mortgage or a holiday let mortgage?
Having one or more buy to let properties has long been a popular investment, however holiday lets are becoming increasingly popular as an attractive alternative for investors.
One of the benefits of a holiday let property is that it can be rented out for far more money than most normal rental properties depending on location and seasonality. So providing you are able to attract regular paying visitors, you could generate a larger income than that of a buy to let property.
For a property to be considered as a holiday let instead of a buy to let, it must be available to rent as a furnished holiday accommodation for a minimum of 210 days a year. That means that there are still 22 weeks of the year the property will be vacant so that you can enjoy it for yourself.
What are the tax benefits of a holiday let property?
An additional benefit of a furnished holiday property for let is some of the tax differences from that of a buy to let property.
A furnished holiday let is classed as a business which allows you to still claim tax relief on mortgage interest in comparison with buy to let properties where that tax relief is being reduced.
Also because it is classed as a business, you are able to deduct all of your expenses from your holiday let income before your tax is calculated. That also includes any interest you are paying on the mortgage.
How Can I get a Mortgage on a Holiday Let?
Holiday let mortgages tend to sit somewhat awkwardly – as a loan supporting a business but secured on a residential property. Our experts have years of experience in acquiring holiday let finance for our clients. With the knowledge and relationships built with the necessary lenders our mortgage managers can assist you in securing your holiday let mortgage.
Will I need to Remortgage for a Holiday Let Property?
Holiday let mortgages are different from buy to let and as so are viewed and dealt with differently with many traditional lenders being unlikely to offer a mortgage on a holiday let property. This is mostly due to the fact that a holiday property is more often than not seasonal with peaks and lows and therefore rental income is inconsistent.
To ensure that you will be able to keep up with repayments during times of low occupancy there are extra checks that can be done to obtain a holiday let mortgage. You would likely need a larger deposit then required on a standard mortgage – this would mean looking to raise a minimum deposit of around 25% of the property value to successfully acquire a mortgage. If you are able to increase this to around 35-40% then your chances of approval will greatly increase.
To raise the extra money needed to secure your holiday let, you might want to consider a remortgage deal on your current property which could possibly release equity in your home. If your existing property has increased in value and you have made significant headway on paying off that mortgage, then it is possible that enough equity can be released for a deposit on your holiday property.
Holiday Let Mortgage Calculator
At Large Mortgage Loans our experts are able to assist you in obtaining the right mortgage deal for your holiday let property. Use our mortgage calculator to get an idea on what your monthly payments might be on a holiday property.
If you would like more information or want to talk it through with one of our team then please don’t hesitate to contact us.