New product, improved holiday let mortgage criteria

The number of investors looking to enter the Holiday Let market is growing rapidly, fuelled by many factors, not least, the Government’s attempt to cool the buy to let market by reducing the tax relief available to higher rate tax paying landlords. This is not the only reason, however, that the demand for holiday accommodation is growing. Many more Europeans are choosing to holiday in the UK these days, attracted by great locations, good food, accommodation and, of course, a weak pound.

We have been providing holiday let mortgage advice since 2006 when there were only around 4 lenders active in the market. Just before the financial crash in 2008 this number had grown to 7, not a great number when to compared to the market for BTL (buy to let) mortgages.

As we stand today there are around 20 lenders offering holiday let mortgages, but over 50% of these lenders are not seriously in the market, they are just trying to pick up the odd case that might fit their BTL lending criteria. Their products only use AST rental income rather than holiday let rental income to drive affordability and maximum loan. Alternatively, some restrict affordability of their mortgages to the use of 50% of projected rental income, or require 1 or 2 years accounts for the holiday let business.

Lending criteria for holiday lets has always been tighter than BTL, leaving many good potential borrowers out in the cold.

Well that’s all about to change.

Holiday Let Mortgages has been working with a small UK Bank to produce a range of low cost products aimed directly at the holiday let market. The criteria is designed to open up the market for potential borrowers by removing much of the restrictive mortgage lending criteria that is often present.

The products use projected holiday let rental, but also have no requirement for a minimum income; are available to age 88 at entry and to 75% LTV up to £1.5m.

Those potential owners who have bought run down properties and brought them back to life can now get a day one re-mortgage, rather than having the usual 6 month wait. Moreover, the products are available to the Scottish Self Catering market on equal terms.

Have a holiday let enquiry? Call the people who know on 020 8301 7931