Holiday Let Mortgages

Helping you gain access to the UK’s leading Holiday Let mortgages. We’ll help you choose the most competitive deal from 100’s of mortgage products. Make your Holiday Home dream a reality and let us help you save time, hassle and money.

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How does a holiday let mortgage work?

Holiday Let mortgages are based on a combination of the property value, deposit available, the clients income and most importantly the expected rental income the property will generate.

Lenders will take into account all of these factors when utilising their mortgage calculator to consider the level of the loan available.

The Loan to value i.e. the mortgage as a percentage of the property value will also dictate the interest rate available on the loan.

Please note that Goldmanread do not advise on mortgages on overseas property.

Differences between a buy-to-let mortgage and a holiday-let mortgage

The main difference between a Buy to let and Holiday Let mortgages are as follows:

  • Location: A Holiday let will tend to be located in a particular location i.e. the countryside, near the coast or close to national parks. Places where it is common for people to spend time on holiday. For example many Holiday lets properties are located in Devon and Cornwall. Standard buy to lets will tend to be located in City Centre locations where most people live and work.
  • Rental income: A Holiday let will be rented on a short term basis, mostly weekly and may spend long periods empty, especially in the Winter. Buy to lets will tend to be continuously rented with few void periods.
  • The rental income assessment of a Holiday Let mortgage will usually be assessed based on a letter from a local Holiday Letting company who will be familiar with the price ranges for holiday lets of this type. Lenders will take an average of the weekly rental in low, medium and high season. Standard buy to lets will be based on a valuers opinion of what the property can achieve when rented on a long term basis or alternatively the assessment of a local letting agent.
  • A Holiday letting lender will tend to use different pay rate calculation figures to those used when assessing a mortgage on a buy to let property.

What are the tax benefits of a holiday let mortgage?

The tax benefits of a Holiday Let mortgage mainly relate to the following:

  1. Tax relief on the rental income generated by the property.
  2. Beneficial Capital Gains tax treatment on the sale or disposal of the property.

Goldmanread are not qualified tax advisers and we would recommend that you seek specialist tax advice when considering this aspect of buying a Holiday Home as a rental investment.

FREE Holiday Let Mortgage Consultation & Advice

Complete our form to request a free initial consultation about finding the right holiday let mortgage for you.

How is buying a holiday let property different to buying a residential buy-to-let?

There are differences in how the property will be used i.e. on a short term, weekly basis mainly for Holiday Lets. Residential buy-to-lets will tend to be rented on a longer term basis, usually this will be a 12 month assured shorthold tenancy.

Holiday let mortgages will be assessed on the basis of the likely seasonal rental income to assess the projected rental income the property will generate. The mortgage will be based on the basis of this annual rental figure.

One major difference between these types of mortgage is that with a Holiday Let mortgage you are usually allowed to use the property for your own personal use for a certain period of time each year. Residential buy to lets do not allow you to live in the property and indeed this is specifically against the terms of a buy to let.

There may be a better choice of mortgage interest rates available on a standard buy to let mortgage simply because there tends to be a greater choice of buy to let mortgage products. This means that the mortgage payments may potentially be lower.

Do I need a specialist mortgage?

Yes, Holiday let mortgages are specialist mortgages which end to come with very different criteria to other forms of mortgage lending. These types of mortgage tend to be available from niche lenders like smaller building societies or indeed lenders who only lend via intermediaries.

It’s important to check that the holiday let property chosen will provide enough rental income to justify the mortgage level.

Lenders will also offer different products depending on the type of holiday accommodation chosen. This will also have an impact on the holiday let mortgage rates. Often lenders will offer mortgages with significant early repayment charges. Its important to take these into account when assessing the right loan.

Another factor that will effect the type of mortgages holiday homes allow is the level of deposit available and whether you own more than one holiday home.

Holiday let mortgage lending criteria

Holiday let mortgages have different lending criteria than standard residential or buy to let mortgages. Perhaps the key difference is the way the rental is assessed which will be based on the likely short term rental that can be achieved. Other factors to take into account is the minimum income requirements of the applicants.

These type of mortgage may also require a higher deposit requirement than standard residential mortgages.

The lender may also take into account your own personal income and financial standing when assessing your eligibility to buy a holiday home.

Find mortgage deals with our best buy tool

As a leading mortgage broker Goldmanread offers a comprehensive choice of mortgages across the market and can give you access the UK’s leading Holiday Home Mortgages. Lenders include Leeds Building Society and Principality Building Society.

We will source the lenders offering the most competitive mortgage interest rates which means that your mortgage payments will be as low as possible.

Holiday let mortgage rates

Holiday let mortgage interest payments will be broadly in line with those available of standard residential buy to let mortgages.

They will tend to be more expensive than the mortgage repayments offered by standard residential mortgages which reflects the fact that these are seen as more commercial investments which are a higher risk than standard mortgages.

How to find the best holiday let mortgages

Given the level of choice on the market and the different lending criteria relating to holiday let mortgages we would always recommend that you get advice from a qualified mortgage broker.

Arranging a mortgage on a Holiday Let mortgage is a very different proposition to arranging traditional residential mortgages.

There are only a few specific lenders who offer holiday let mortgages. By using a suitably qualified broker you can ensure you have access to the right lender who will offer you a competitive rate as well as one who’s criteria you meet.

FAQs

This will very much depend on the specific holiday let property and the potential rental income it can generate. Generally speaking Holiday Lets are seen as very popular investments especially since the pandemic when its become increasingly popular for people to remain in the UK for their “Staycation”.

Clearly you need to be very aware of the market you are buying into to make sure that the holiday let market is not over saturated. This will effect your ability to rent the property out at the right price and to make a profitable return.

Many investors will consider purchasing one or two furnished holiday accommodation mortgages alongside standard buy to let properties to diversify their portfolio.
Each lender will have its own specific mortgage criteria. When looking at your Holiday Let mortgage options its important to find the right loan that fits with your own individual circumstances.
When making a holiday let mortgage application to buy a holiday home it’s important to consider upfront the full criteria requirements of the specific mortgage lender as well as the mortgage rates they offer.

One of the key things many clients want from a Holiday Home purchase is the ability to use it themselves on occasion. Many holiday let lenders will allow this subject to a maximum period of time each year during which you can use the property personally.

It’s important to choose the right mortgage, whether via a bank or building society to ensure that this option is allowed.
There are several tax implications around Holiday Lets relating mainly to the taxation of rental income, allowable expenses and capital gains.

The tax advantages will depend on whether you buy furnished holiday lets with your holiday home mortgage.

There may be certain ways to claim tax relief on furnished holiday let properties.

We would recommend that you consult a qualified accountant to confirm how this type of investment will impact your own specific income tax position and what tax advantages are available.
The obvious answer to this is the level of interest payable on the mortgage.

Apart from the interest rate payable on a Holiday let you also need to take into account costs such as lender fees or valuation fees. A lender fee can usually be added to the loan unless there is an administrative fee payable upfront.

Valuation fees will depend on the level of valuation report that you choose. A basic mortgage valuation may be free or relatively cheap. More in depth valuation reports such as a Full Structural report may cost several hundred pounds.

The cost of the monthly mortgage will also depend on whether the mortgage is structured on an interest only basis or on a repayment basis.
The major alternative to a Holiday Let Mortgage is a second home loan. This is a residential mortgage assessed not on the basis of the likely rental income but on the income of the mortgage applicants i.e. in the same way as a normal mortgage is assessed.

It will be assessed in the same way as a standard residential mortgage and will take into account factors such as any background mortgage on your own home, costs of utility bills any background commitments such as monthly repayments on a personal loan.

A second obvious option is to buy a Holiday Let property outright as a cash purchase. Clearly many people may not want to tie up all of their cash in a single property or indeed have a enough money to buy outright in this way.

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