Holiday Let Mortgages
In 2006, when we first started specialising in holiday let mortgages, they were difficult to find, as only a couple of Building Societies and the odd regional commercial lending department of one of the Banks, were involved in lending. They were not really a subject talked about amongst brokers either.
The advent of AirBnB, Brexit and the recent adverse HMRC Tax changes on buy to lets have fuelled the buzz around the benefits holiday letting and short term lets including serviced accommodation. It’s currently a hot topic and naturally more lenders want to enter the market.
However, although they are now easier to find, the FHL mortgage criteria are incredibly complex, as lenders seek to differentiate themselves from the competition. Some Broker only lenders don’t advertise exactly what is possible, fearing a flood of business.
This is where we add value by finding the best rates, best deals, that you, the property and purpose will fit.
Holiday Letting is classified by HMRC as a business and this can only be a good thing (see Tax Guide).
Loans on holiday let properties are mortgages for a business purpose, AKA commercial loans, that are often secured on a residential property. We have many years’ experience in arranging mortgages to purchase and re-finance short term lets, in most cases at non-commercial rates (subject to status).
See below for an idea of what is possible, then when you are ready, call one of our advisers for an in-depth discussion.
- purchases and re-mortgages of holiday let properties up to a maximum loan to value of 75%, including new build flats
- purchases of second homes with limited holiday letting use to 85% LTV
- limited company holiday let (trading company or SPV)
- first time buyer loans available
- max loan size (subjects to limits above) assessed on rental income or a combination of rental and personal income
- non-traditional construction available. Minimum value £150,000
- properties in Scotland
- Up to £1.5m at 75% LTV, low rates
- multiple self-contained holiday lets on a single title
- mixed use/multiple unit holiday lets, where the owner is resident
- holiday let development/conversion and bridging finance
- capital raising on a first or second charge basis available
- purchase and refinance of holiday let businesses
Why use a broker?
It is, of course, possible to arrange a buy to holiday let mortgage yourself, direct with a lender. This may initially seem like the most sensible option but we would (obviously) urge some caution.
We have been advising clients on their holiday let mortgage needs since 2006. We do not know of another broker that has specialised in this area for so long, back in 2006 this market was merely in it’s infancy with very few lenders willing to take part.
Our broking team have long established relationships with the right lenders and of course we have independent access to all of the lenders. It’s this trusted relationship along with our deep understanding of each lenders requirements that enables us to successfully find the best home for our clients finance requirements.
A broker’s deep knowledge and experience is not just useful to find the best interest rate or lowest fixed rate FHL mortgage. They need to add value by suggesting options and strategies to help make your need for finance a reality and in a timeframe that works for you. This is what we aim to do for each and every one of our clients.
We have been providing specialist advice since 2006
As independent mortgage brokers we can offer the maximum choice
Our advisors and their team will keep you updated
Please contact us to discuss your buy to holiday let mortgage requirements or call 020 8301 7931
Some common holiday let questions
Can I get a mortgage for a holiday let?
Mortgages for UK holiday lets are becoming more commonplace and lenders now compete for your business. You will need a minimum deposit of 25% for a holiday let mortgage, be able to prove your earnings and aged over 18.
Is a holiday let classed as a business?
Holiday lets, or furnished holiday lets, are classed by HMRC as a business rather than an investment. This means they are treated differently for income tax and capital gains tax. You can read more about the tax treatment on our Holiday Let Tax page
How do you finance a holiday home?
The way a holiday let is financed can differ between borrowers. Normally the deposit (25%) is provided from savings and then the balance is borrowed on a buy to holiday let mortgage, specifically designed for a holiday letting property. This is then paid from the rental income, and occasionally topped up from personal earnings.
How much deposit do I need for a holiday let mortgage?
For UK properties you will need a minimum deposit of 25% of the property value. Some lenders may ask for a higher deposit. The higher deposit reflects the higher risk as it is an investment property.
How much can I borrow for holiday let?
It is possible to borrow 75% of the property value or purchase price for a UK holiday let. Borrowing less may offer more mortgage choices (as not all lenders offer 75%) and the possibility of lower rates.
What qualifies as a furnished holiday let?
To make sure your property qualifies as a furnished holiday letting, it must be: in the UK or EEA furnished available for commercial letting to the public, as holiday accommodation, for at least 210 days a year (2019/2020) commercially let as holiday accommodation for at least 105 days a year (2019/2020) – the rent must be charged at market rate and not at cheap rates to friends and family, and a short term letting of no more than 31 days You can read more about the tax rules here https://www.holidayletmortgages.co.uk/holiday-let-tax-information/