 Holiday
Home Finance – Don’t Forget the Extra Costs. EB
July 2007
When you at last find your dream holiday home,
the next step is to look for your
holiday home finance.
If you are like most people, you will need a
mortgage to finance your holiday home. You may
already have a mortgage on your main home, or
other financial commitments. In this case you
will need to budget very carefully to find the
means to afford another mortgage. But when you
are working out your budget for your
holiday home finance, don’t forget there
are other things that need to be taken into
account.
• Survey. It’s very important that you have a
survey done. The provider of your holiday home
finance will probably arrange a survey
themselves and add it to the cost of your
mortgage. But remember the purpose of their
survey is primarily to satisfy themselves that
the property has enough resale value to provide
the security they require. It’s up to you to
satisfy yourself that the property is
structurally sound, especially if it’s an old
cottage or an unusual property. A full
structural survey can cost around £1,000.
• Legal fees. You will really need a solicitor,
especially if your property is “different” in
some way. There will also be land registry fees
and local authority search fees, which the
solicitor will arrange for you.
• Stamp duty. Any property with a purchase price
over £125,000 will incur stamp duty, which is 1
per cent up to £249,000 and 3 per cent over
this. That actually comes to quite a lot of
money and you’ll have to remember to budget for
it.
• Insurance. The provider of your holiday home
finance will require life assurance cover and
will also require you to have buildings
insurance. Some lenders insist on you having the
buildings assurance with themselves, while
others allow you to shop around. In addition to
this, you really will need contents insurance –
this is important if you’re not going to be in
the house all the time.
• Council Tax. At one time, holiday home owners
only paid 50% council tax. But now local
authorities are allowed to charge 90 per cent
and most do. In some areas this can be very
high.
It’s easy to forget about these extra costs in
all the excitement of arranging your
holiday home finance. However, they are all
essential and if you don’t budget for them, you
could find yourself in trouble.
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