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Mortgage Advisor & Director
What is a holiday let mortgage?
A holiday let mortgage is a mortgage arranged for the purposes of buying a holiday or seasonal letting basis.
As with standard buy to let mortgages, holiday let mortgages can be either interest only or capital and interest basis.
The main difference between holiday and standard buy to let mortgages it that the lender will take into account seasonal variations into the rental yield calculation.
At Teito, we search thousands of mortgages to find you the best deal possible and work with specialist lenders, including those who consider holiday let mortgage applications. Complete our simple online form now to get started on your holiday let mortgage journey.
How do holiday mortgages work?
Since holiday lets are subject to seasonality when it comes to occupancy and rates achieved, the lender will take a blend of these rates when calculating the yield. This is in contrast to a standard buy to let which has a flat annual income applied.
Eligibility for a holiday let mortgage
To be considered for a holiday let mortgage, there are specific criteria that you should meet.
If you are looking for a second home as a holiday home, rather than a holiday let, then the lending decision will be based on your personal finances.
While each lender will have varied eligibility criteria, generally you will need to meet the following to be considered for a holiday let mortgage:
- You should already be a homeowner
- You should be over 21 years of age
- A minimum salary of £20,000 is expected
- A deposit of 25%
How much deposit do I need for a holiday let mortgage?
Typically you can expect to contribute a deposit of 25% for a holiday let mortgage, however, depending on the property and the circumstances some lenders may stretch to 85% LTV, or 15% deposit.
How much can I borrow with a holiday let mortgage?
Understanding your borrowing limit will help you to assess potential holiday let properties.
One variable that will influence the amount you can borrow is the rental value, which is calculated using a split between high, medium and low season rates. A stress test is then applied to ensure you will be able to make mortgage repayments even if you are not achieving the expected rates.
Typically lenders will expect the rental income to be at least 125% of the monthly mortgage repayment value.
What rates can I get on a holiday let mortgage?
Many factors influence the rates you will be offered on your holiday let mortgage.
While these will vary between lenders, factors such as Loan to Value (LTV) ratio, credit history, length of term will all have an impact on the rates you achieve.
As holiday let mortgages are not a standard mortgage offering, there are fewer lenders in this area of the market which can potentially drive up prices.
As a whole of market broker, at Teito we work with specialist lenders including those who deal with holiday let mortgages day to day. Our advisors have helped many people like you to get the best rates possible on their holiday let mortgage, sign up today and put our team to the test!
Can I get an interest-only holiday let mortgage?
Yes, it is possible to get an interest-only holiday let mortgage.
Can I get a holiday let mortgage if I have bad credit?
There are many reasons why you may have a bad credit history. Although it is undoubtedly more challenging to get a holiday let mortgage with bad credit, it is not impossible. Speak to one of our advisors to discuss the options.
How can I get a holiday let mortgage?
As holiday let mortgages are a specialist mortgage product, we would recommend using an experienced broker.
Our team of advisors work with hundreds of lenders to find you the perfect mortgage. Get started now, and we promise to make getting your holiday let mortgage as straightforward and stress-free as possible!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
