The rise of sites such as Airbnb and HomeAway has been phenomenal. Since launching just over a decade ago, the market leader Airbnb has recorded more than six million rooms, flats and house listings in more than 81,000 cities across the globe. In London alone, there were more than 77,000 homes listed in Summer 2019, representing a fourfold increase since 2015.[i]
What some may not realise is that, if you’re purchasing real estate with the intention to let it out as a holiday home, your mortgage provider needs to know that information and you will need a specialist product to suit your requirements.
Our clients were looking to purchase an eight bedroom Victorian manor house which they planned to renovate into a holiday home and subsequently rent out. The difficulty came in the detail; most buy to let mortgages on holiday homes limit the property size to four bedrooms. Additionally, the clients were looking for £200,000 more than the usual borrowing limit on holiday let mortgages.
We scoured the market and approached a lender to negotiate the client’s requirements. In addition to concessions over both the size of the property and the mortgage, we were able to agree that the clients would be allowed to live on site during the planned renovation works, something which is not usually allowed with buy to let holiday home properties.
|Rate:||2.49% discounted rate for the mortgage term|
|Loan To Value:||31%|
|APRC:||Overall cost for comparison 2.70% APRC representative variable|
|Loan purpose:||Holiday buy to let|
|Lenders arrangement fee:||1.50% of loan amount|
|Early repayment charge:||5% of the outstanding loan amount in the first year, reducing by 1% year on year for 5 years|
Overall cost for comparison 2.70% APRC representative variable based on 144 monthly payments at a discounted rate of 2.49%. Total amount to be repaid is £656,623.
Because part of the loan is a variable interest rate loan, the actual APRC could be different from this APRC if the interest rate for your loan changes. For example, if the interest rate rose to 10.74%, the APRC could increase to 11.50%. The actual rate and product available will depend upon individual circumstances and may not be available to everyone. Ask for a personalised illustration.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not some aspects of Buy to Let mortgages.