Holiday let mortgages

A holiday rental home can be a great investment. Holiday let mortgages can help with the purchase of this type of property. They allow you to capitalise on the housing market and benefit a from rental income.

Holiday let considerations

Although there are many advantages to buying a holiday let property, there are some things that you should consider beforehand:

Your current mortgage situation

It’s likely that you will already have a mortgage on the house that you live in. It can often be more difficult to get a second mortgage if you haven’t already paid off your first. If you can manage to get approval, your current mortgage can also make a huge difference in the amount you can borrow on a second property.

Property location

The location of the property you are looking to buy can also impact to your holiday let mortgage application. Many lenders consider mortgages on properties abroad to be a much higher risk in comparison to those within the UK. This is due to it being more difficult to find tenants to provide the rental income for the mortgage. Additionally, there are other potential risks with holiday lets abroad such as the unfamiliar property market and unexpected changes in foreign currencies and laws.

Your finances

Your financial situation plays the biggest role in your mortgage application, especially when you are looking to have two mortgages. Lenders will look at your monthly income and spend to ensure that you can realistically afford to pay two mortgages. They will also consider your salary without the potential rental income. This is to assess whether you will be able to afford the monthly repayments if the house is left vacant. Above all, lenders will look at your credit rating and check whether you have successfully paid back any previous loans. Defaults on payments or other implications that have left you with a poor credit rating could impact your chances of getting a mortgage on any second home.

Please note that if you have a history of bad credit, taking out a mortgage might not be the best option for you.

Holiday let vs second home

A holiday let is different to a second home – or holiday home – as the latter mostly describes a property that you or close relatives use from time to time, rather than renting to third parties. If you are looking for a mortgage on a second property that is for your use then you should have a look at second home mortgage options instead.

Holiday let vs buy to let mortgage

Unlike a buy to let property, a holiday let is likely to have multiple occupants throughout the year with each of them staying for a short time period while they are on holiday. Mortgage lenders often consider this to be a higher risk than a buy to let. This is because you have less control of who is using your property.

Buy to let mortgages

Second home mortgages