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Deposits For Holiday Let Mortgages

the source of your deposit could affect your mortgage
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When purchasing a property with a holiday let mortgage you will need to provide a cash deposit of at least 25%

The source of the deposit is an important consideration that is often overlooked by many purchasers.

Deposits can come from:

Cash savings

Investments

Property sale

Inheritance

Remortgage

Gifted money

There are some pitfalls when dealing with raising a deposit by remortgaging a property you already own, that if overlooked can ruin a good case or cost an applicant quite a bit of money in abortive costs.

Issues that often arise when trying to raise a deposit from equity in other properties

  • The current mortgage is tied to an existing lender with large Early Repayment Charges and they won’t offer you a further advance
  • Currently you’re enjoying a great long term low rate deal that’s too good to let go, but your lender won’t offer a further advance

In addition to obstacles in raising the deposit for the purchase of a holiday let, there is also the real possibility of going about it the wrong way!

Examples include:

  • attempting a re-mortgage to a lender that does not allow capital raising for the purpose of buying a holiday let
  • re-mortgaging to a lender that insists on simultaneous completion of the re-mortgage and holiday let purchase
  • raising deposit capital through a remortgage on a main residence, when purchasing a commercial holiday let, can cause rejection if the commercial lender believes that the applicant is becoming over exposed to interest rate increases that may effect overall financial stability