Self Cert Holiday Let Mortgages – 05/03/2008

The buy to let mortgage market is now very well established and the majority of buy to let lenders offer mortgages on a self cert basis. Self cert means that you do not have to prove your income. When you apply for the buy to let mortgage you will declare to the lender your income from all sources, this could be an employed job with self employed additional earnings, or large but un-guaranteed bonuses. You may be long term self employed but have yet to get your accounts up to date or in order.

So how does this trend affect the holiday let mortgage market. By comparison, the holiday let mortgage market is relatively young. Lenders started offering specific holiday let mortgages around 2-3 years ago whilst some simply accepted holiday lets on their buy to let mortgage products. The market is still really in its infancy with many of the buy to let mortgage companies not accepting holiday lets.

However, the number of lenders is growing and some, like buy to let, are able to offer a self cert holiday let mortgage. The principle is the same, as self cert mortgages all operate in a similar manner. A self cert holiday let mortgage makes applying for the mortgage that much simpler. No payslips or P60’s to find and no chasing your Accountant for up to date accounts. There is generally a price to pay for this convenience and the mortgage interest rate will tend to be slightly higher than a full status holiday let mortgage where you have to prove your full income. The more adventurous holiday let mortgage lenders will even accept a self cert declaration for the potential rental income.

These lenders are really just lending against the asset, the property itself. They will use sophisticated credit scoring and credit modelling techniques which allow them to only select desirable customers, those people who have shown they can control and pay their credit commitments.

Self cert holiday let mortgages are currently available up to 85% of the property value with an upper limit of £500,000 which is sufficient for most borrowers needs.

If you need a holiday let mortgage outside of this criteria or wish to gain the best interest rates then a self cert holiday let mortgage is probably not for you. By proving your income to a lender you should be able to lower the overall cost of your holiday let mortgage.

The holiday let mortgage market is still growing and, in time, more lenders will come in to this lucrative market. We will have to wait and see whether any of them offer a self cert holiday let mortgage option but once the market becomes more established the lenders will be more confident in offering self cert holiday let mortgage options.