Ardent Team

3 February 2020

What are your holiday let aspirations for 2020? We share our mortgage tips.

Whether you are just starting out buying your first holiday let, or you are an established holiday let professional landlord, this article will provide an insight on how a holiday let mortgages work and how they can benefit you.

When the words ‘holiday let’ are said, many people think of lush villas in Spain or Portugal. However, there is a thriving holiday let market here in the UK. Whether you are looking at buying a period slatestone property in the Lake District, or a flat in York City Centre.

 

Holiday let mortgages

A holiday let mortgage is a different type of mortgage to the conventional residential mortgage or buy to let mortgage. They are designed for properties that will be rented out on a short-term basis, using a holiday letting company, estate agent or even AirbnB.

 

How holiday let mortgages differ from buy to let mortgages

A normal buy to let mortgage uses the rental income from an AST (assured short hold tenancy) agreement. This is based on the property being rented continually with a set monthly rental income paid by one tenant. A holiday let differs in the way that there will be multiple occupants each month and the rental income could fluctuate with every stay.

 

Furnished holiday lets also differ in tax structure to normal buy to let properties. Through renting the property on a short-term basis, holiday let landlords look to boost their income in comparison to how much they would receive on a normal buy to let tenancy. There is a growing market of lenders who will look at holiday let mortgages, each having their own criteria. A 25% deposit and a minimum personal income of £20,000 is a good starting point.

 

How holiday let mortgages are assessed

Holiday lets are usually assessed through a local estate agent or holiday let company. They will provide a projection of annual rent they believe is achievable through renting the property on a short-term basis. If the holiday let is already rented, this can be positive if you are achieving over the expected market rate.

 

Holiday let mortgage lending criteria

The holiday let mortgage market has different lending criteria which could prove difficult when looking at purchasing or remortgaging. It can be highly beneficial to obtain independent mortgage advice to ensure you are obtaining the best deal on the market for your circumstances.

 

Get in touch

If you would like advice on your holiday let requirements, then please call Graham, John or Nick on 01904 655 330.

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