Correct at 31/03/2021
Finding a mortgage for a holiday home that you plan to let out isn’t always straightforward, but our mortgage experts can help secure the best deal for your circumstances.
They can talk you through all the different holiday let mortgage options, helping you access specialist mortgages which you might otherwise struggle to find. Our advice won’t cost you a penny either, so get in touch with us now to see how L&C could help you.
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Holiday lets have become increasingly popular in recent years as their tax treatment can be more favourable than standard Buy to Let properties.
Furnished holiday lets can be treated as a business, which means they can benefit from tax relief on mortgage interest. With conventional Buy to Let properties, relief on mortgage interest has gradually been reduced over time so that it will eventually only be available at the basic rate of tax.
Getting a mortgage on a holiday let home isn’t the same as getting a mortgage on a residential or conventional Buy to Let property.
Lenders can be more cautious about offering mortgages on holiday homes that are rented out, because there are no guarantees on how long the property will be let for each year.
They’ll usually therefore require a bigger deposit, typically 25%, and will want to see evidence that you’ll be able to cover mortgage payments during periods when your holiday home isn’t rented out.
Our experts will talk you through all the available options to help you decide whether a holiday let mortgage is right for you.
With a holiday let mortgage, you’ll usually have to put down a substantial deposit, at least 25% of the property value, and be able to demonstrate to the lender that you can cover your mortgage costs when the property isn’t rented out.
Holiday let mortgage rates tend to be higher than rates on residential or standard Buy to Let mortgages because the lender is taking on a higher level of risk. The amount you’ll pay will depend on the sum you’re borrowing and the mortgage rate and term you’ve chosen.
No, some lenders also offer mortgages for holiday lets on an interest-only basis, but you’ll need to have a plan in place for repaying the mortgage capital.
You can only convert your holiday let mortgage to a residential mortgage if you’re planning to move into your holiday home and live there full-time.
Choosing the right mortgage for you can be really tricky.
At L&C our expert advisers guide you through the process. Simple and efficient.
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