Holiday Let Mortgages
In recent years, there has been an increase in the number of people holidaying in the UK and this has no doubt led to a rise in the number of holiday homes being made available to rent to tourists as a business venture. So, if you are considering buying a property to rent out as a holiday let how do you go about funding the purchase if you are unable to buy the property outright from savings?
Well, there are a small number of lenders including some building societies that provide holiday let mortgages. The lending criteria vary between those providing such finance so the following is merely a rough guide: –
• Amount of advance – minimum £50,000 to a maximum of £1 million
• Loan to Valuation (LTV) – 75% maximum
• Term – 5 to 40 years (repayment by age 85)
• Annual rental income – annual rental income should be a minimum of 125% of annual mortgage repayment assuming an interest rate of say 6.25%
• Minimum background income – £25,000 gross
• Applicants must be existing owner occupiers
• Income/expenditure statement may be required to confirm affordability
To count as a holiday let the property must be available for rent for a minimum of 210 days per annum.
The interest rate is usually higher than for that of a residential mortgage.
One of the attractions of holiday let properties compared to properties let out on a 6 or 12 month tenancy agreement is the potential of a greater return on your investment as you can usually charge significantly more to rent out a property for people to occupy whilst on holiday. However, you will be responsible for servicing the property prior to the new holidaymakers entering the property.
As with many forms of investment you may wish to seek professional advise as to the viability of a holiday let as well as seeking advise about holiday let mortgages. We hope that you find the above of some benefit.