The Ultimate Guide to Getting a Holiday Let Mortgage
If you want to take out a holiday-let mortgage, then you are not alone. Interest is booming right now, and more and more Brits want to explore this as an option. If you have never looked into holiday lets before, then this is the guide for you.
What is a Holiday-Let Mortgage?
With a holiday-let mortgage, you will take out a loan for the value of the property. This will be rented out for a portion of the year. If you want to qualify for this, for tax purposes, you have to let the property out for at least 105 days out of the year. If you rent out a furnished holiday home, you may be able to claim capital gains tax relief.
Is it a Good Investment?
Starting up a holiday-let investment can be a good idea. The general up-front cost can be expensive, but if you manage to secure a property in a sought-after destination then you can often rent it out for a higher rate to compensate for this. It’s very easy to generate a second income as well if you have a lot of tenants willing to rent the property from you.
What do I Need to Know about Holiday-let Mortgages?
Holiday-let mortgages are usually given on a repayment basis or an interest-only basis. Lenders charge a fee if you make repayment early. There aren’t many providers who offer this kind of mortgage and for this reason, it can be hard to know which criteria you need to be fulfilling. As a general rule, lenders will ask for your income to be between £20,000 and £40,000, some require no personal income. The general LTV or loan-to-value rate stands at around 70%-75% in most cases, but again, this can vary depending on the lender that you go through. The best way for you to ensure that you aren’t overpaying would be for you to go through a mortgage advisor.
If you would like to speak to a mortgage advisor today, contact us on 0800 001 6515 and we will be happy to assist you with any questions you may have regarding holiday-let mortgages.
Source – The Times – Money Mentor – 6th August 2021
