Holiday Let Mortgages
Holiday lets and property rental in general can provide a lucrative source of income. Whether you’re renting as a business or in addition to your day job, there’s money to be earned – and GPS Financial can help with that.
We are award-winning mortgage brokers that specialise in holiday let mortgages and can help you with every aspect of property finance.
What is a Holiday Let Mortgage?
A mortgage for holiday let is used to finance a property that’s let out to paying guests for holidays. It is not for financing a holiday home for yourself, and it’s different from a standard buy to let mortgage.
Due to the fluctuations inherent in the market, holiday let mortgages have stricter lending criteria than other types of mortgages.
How does a Holiday Let Mortgage work?
A holiday let mortgage works in the same way as most property finance. You borrow an amount of money secured on the property and make repayments on a monthly basis.
You can have interest-only holiday let mortgages and standard repayment mortgages.
To qualify for a holiday let mortgage, lenders will usually require:
- No minimum income requirement
- A business plan or rental projection showing sufficient rental income (typical minimum of 125% mortgage repayment)
- The borrower should already be a homeowner and over 18 years of age
This is a rough guide for illustration purposes and will vary according to the lender.
To mortgage a holiday let, the property will need to be made available to rent on a short-term basis for at least 210 days per year for no longer than 31 days at a time.
Your holiday let should be let for at least 105 of those 210 days, 50% daily occupancy.
You can rent it out for longer but it won’t count towards that requirement. You can also rent it out to friends and family, but that won’t count either.
If you can satisfy that criterion, HMRC will allow you to deduct mortgage interest from your rental income so you pay less tax.
You can also use the property for your own use outside of that 210 availability requirement.
How much does a Holiday Let Mortgage cost?
How much a mortgage for a holiday let costs depends on the property, the interest rate and any fees charged by the lender.
There’s a 3% stamp duty surcharge to consider and interest rates can be higher than standard mortgages.
Each mortgage and circumstance is different so it’s impossible to provide an accurate estimate for every use case.
We recommend contacting one of our specialist team who can discuss holiday mortgages with you in more detail.
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Are holiday lets a good investment?
Holiday lets can be a good investment if you perform your due diligence first.
The UK holiday market is as strong as it has ever been. More people are holidaying at home than ever and demand for holiday rentals remains high.
Potential rental yield is much higher with a holiday property than with standard rentals, but the market is competitive.
As long as you choose the right property in the right location, it could be a very good investment.
Can I get a Holiday Let Mortgage?
If you think you meet or exceed the lender requirements mentioned above, you may be able to get a holiday let mortgage.
Work with GPS Financial and we will do everything in our power to match you with the right lender at the best rate.
What are the alternatives to a Holiday Let Mortgage?
The only viable alternative to a holiday let mortgage is to buy with cash.
A buy-to-let mortgage is designed for standard rentals, not holidays. It doesn’t have the tax benefits either.
Buying with cash, either from savings or by remortgaging your own home, is the alternative you have for your holiday let mortgage in the UK.
GPS Financial can assist with any of your mortgage or remortgage needs.
Holiday Let Mortgages from GPS Financial
Holiday let mortgages from GPS Financial provide the finance you need for a new business venture or to provide extra income from holiday rentals.
We work with a pool of reliable lenders with a track record of offering fair terms and competitive rates. Our team will help you every step of the way and manage as much or as little of the application as you need.
Contact our team to discuss your requirements.