fbpx

Mortgage Advice Experts

Menu
  • Home
  • Videos
  • Mortgage Calculators
  • Residential
    • Mortgage Deals
    • First Time Buyer
    • Remortgage
    • Right to Buy Mortgage
    • Bad Credit Mortgage
    • Self Employed
    • High Income Multiple
    • Help To Buy Mortgage
    • Gifted Deposit
    • Foreign Nationals
    • Debt Consolidation
    • Equity Release
    • Close
  • Buy to Let
    • Buy to Let Mortgage Deals
    • Buy to Let Tips
    • BTL 80% Loan to value
    • Buy to let Remortgage
    • Let to Buy
    • HMOs
    • Buy to Let with Bad Credit
    • Limited Company
    • Portfolios
    • Holiday Lets
    • Ex Pats
    • Rent to Family Memeber
    • DSS Tenants
    • Into Retirement
    • Foreign Nationals
    • Inherited Property
    • Close
  • Bridging Loans
    • Commercial Mortgage Tips
    • Bridging Loans Explained
    • Why use Bridging Finance
    • Bridging Finance Rates
    • Auction Finance
    • Auction Finance Rates
    • Non Standard Commercials
    • Development Finance
    • Close
  • Protection
    • Will Writing Service
    • Probate Services
    • Close
  • Testimonials
  • About Us
    • Why Niche Advice
    • Our Fees
    • Testimonials
    • Blog
    • Join our Team
    • Privacy Notice
    • Terms and Conditions
    • Close
  • Contact Us
You are here: Home / Mortgages / Holiday home mortgages / Holiday home mortgages

by Payam Azadi

Holiday home mortgages

buy to let Mortgage Broker

Holiday Home Mortgage and lenders who will take seasonal rental income from holiday makers on holiday Home products

By residential expert Mr Payam Azadi

Holiday Homes can be a very lucrative property investment. This year in particular has seen many families turn to domestic holidays because of the convenience, horrendous flight costs, unsettled countries and unusual hot weather.

‘Entertainment’ attracts a premium on commercial activities and letting to people on holiday is no exception. However, finding a Holiday Home Mortgage is a difficult affair and it is probably wise to look for professional help from a Mortgage Broker otherwise you could encounter disappointment from the lenders and incur abortive costs.

So why are Holiday Home Mortgages stigmatised by even the most productive of buy-to-let lenders? Well the lenders believe that the average landlord is incapable of budgeting (which is strange really as running multiple households requires this exact skill) and are unlikely to hoard money in the peak season and apply it in the lean. Their view is it will be spent and as such the mortgage could fall into arrears.

The back drop to all lending is the risk of non payment and unlike insurance where the risk can be split and re-insured elsewhere non-performing Holiday-lets rest entirely with one organisation, the lender, and they would be difficult to sell in the event of a default. This means lenders prefer not to part-take in the market or offer higher than normal interest rates. The problems are compounded when you look to include more than one Holiday Home Mortgage in your buy to let portfolio as it rules more lenders out of contention.

Which lenders lend on Holiday Home Mortgages

There are currently fourteen active lenders in the Holiday Letting market* but in our experience a large proportion of these are looking for exceptional quality and locations so be mindful otherwise you could potentially be wasting your time with your Holiday Home Mortgage application and incurring unnecessary costs.

Low Interest Rates for Holiday Home Mortgages

The good news is that Niche Advice is a whole of market Mortgage Broker and as such are not limited by choice and get access the lowest Holiday Home Mortgages on offer. This is particularly important in this market as in is common for lenders to offer premium variable rates only for holiday let mortgages.

To give you a flavour of the rates we can currently offer look below:

Cheap Holiday Home Mortgages

Type

% of deposit

Initial Rate

Overall APR

2 year tracker 40% 2.39% 4.8
2 year fixed 40% 3.19% 4.8
2 year fixed 30% 3.40% 5.5
3 year fixed 30% 3.89% 5.8
5 year fixed 30% 4.29% 5.5

For full details and an individual quote specific to your circumstances call Niche Advice T: 020 7993 2044.

How do I find out how much I can set my holiday let rent for and how will this help speed up my Holiday Home Mortgage?

The key underwriting component to a Holiday Home Mortgage is the rental yield that is to be expected. The best place to start is the internet to see if the property you are buying is already listed on the main holiday websites such as www.cottages4u.co.uk

Once you are happy with the level you can achieve you will then need to collect independent evidence to show to the lender. This is best achieved by obtaining quotes by email from local letting agents. It is worth doing this leg work up front ahead of your Holiday Home Mortgage application as it will speed up the underwriting process and will also help prevent errors happening later in the process, the most common one being the surveyor viewing the property as a ‘plain’ buy-to-let and providing irrelevant rental figures.

How much will my Holiday Home rental income need to be to qualify for a Holiday Home Mortgages?

A helpful letting agent might provide figures splitting down your expected revenue between:  ‘high’ season; ‘low’ season; school holidays; short breaks; and ‘long stays’ etc. If the property is let for a high proportion of the year the lender will be more comfortable but ultimately all the holiday home mortgage lender are interested in is the annual rental figure.

Most lenders will be looked for a minimum ‘comfortable factor’ of a surplus of at least 25% to allow for agency fees, insurance and voids. Other lenders will need this cushion to be as much as 50% – so you will need to check or ask your Mortgage Broker to do so on your behalf.

For example:
A cottage in Sandbanks in Poole grosses an annual rent £30,000. To purchase the Holiday Home you need £250,000 mortgage. The interest rate the lender is charging is 3%.

Rent: £30,000

Mortgage: £250,000 x 3% = £7,500.

The holiday let lender needs 125% coverage above the mortgage payment. Therefore the rental yield needs to exceed:

£7,500 plus 25% = £9,375.

And as it is £30,000 it does so easily.

For more information on Holiday Home Mortgages  please contact us on T: 020 7993 2044 or alternatively complete the simple enquiry form on the top right hand side of this page.

Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.

View Payam Azadi's profile on LinkedIn

mortgage broker fees

* Source Business Moneyfacts publication, part of the Moneyfacts Group plc August 2013 Issue 216.

Payam Azadi

Author: Payam Azadi

Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.

Twitter Facebook Linkedin

Filed Under: Holiday home mortgages, Uncategorized Tagged With: broker for Holiday home finance, buying a holiday home, Holiday home finance, Holiday home loans, Holiday home mortgage, Holiday home mortgage advice, Holiday home mortgage broker, Holiday house mortgages, Holiday mortgages, Which lenders lend on Holiday Lets

Proud to be sponsors

Mortgage broker awards

Contact Us

Our Fees

Why Niche Advice

Mortgage Deals

Tools / Calculators

Latest News / Blog

Payam Azadi

UK Mortgage for Asylum Seekers on a Refugee Visa

Asylum seekers on a refugee visa Mortgage options from the Experts This article is aimed at mortgages for Asylum seekers on a Refugees Visa who are … [Read More...]

Payam Azadi

Mortgage for Foreign Students on a Tier 4 Visa

Mortgage options for Students on a Tier 4 Visa in the UK This article is aimed at foreign students on a Tier 4 Visa who are in the UK who are … [Read More...]

Payam Azadi

Declined Buy to let mortgage due to background property portfolio stress test

The background property portfolio stress test is stopping borrowing more There could be a variety of reasons why you've been turned down for a … [Read More...]

AS A MORTGAGE IS SECURED AGAINST YOUR HOME OR PROPERTY, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.

If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

Niche Advice Limited is a Credit Broker and does not lend money directly to clients. Niche Advice Limited is authorised and regulated by the Financial Conduct Authority. FCA Number: 750263.

Commercial Buy-to-Let and commercial mortgages are not regulated by the Financial Conduct Authority.

Our Fees

Click here for our fees structure. A full detailed fee plan will accompany all our quotes.

Niche Advice Limited has a commercial arrangement under an affiliate programme with Check My File and is remunerated for referrals.

Terms and Conditions

If you wish to register a complaint, please write to us on the details below or call us on: 020 7993 2044.

Correspondence Address: Niche, Unit F6, The Addington Business Centre, Vulcan Way, New Addington, Surrey CR0 9UG.

A summary of our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 0234567.

Site Terms and Conditions
Customer Privacy Notice

niche youtube

CONTACT NICHE ADVICE
Tel: 020 7993 2044

Registered Office: Niche, Unit F3, The Addington Business Centre, Vulcan Way, New Addington, Surrey CR0 9UG. Registered in England & Wales. Company registration number: 06599033.

Members of The Financial Intermediary & Broker Association - Number SBS36389

logo

© 2022 · Niche Advice Limited · Site Designed by Niche Advice Design Team

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}