Everything You Need to Know About Holiday Let Mortgages

If you’re considering investing in a holiday home that you can rent to guests, you may be wondering about the best way to finance the purchase. One option is to use a holiday let mortgage, which is specifically designed for this type of property.

Baby looking out of the window of a holiday let.

In this article, we’ll answer some of the most common questions about holiday let mortgages and help you decide if this is the right choice for you.

Is it difficult to get a holiday let mortgage?

Holiday let mortgages can be more difficult to obtain than standard residential mortgages because they are considered higher risk. However, there are still many lenders that offer holiday let mortgages, and working with an independent mortgage broker like Prospect Tree Mortgages can help you find the best deals available to you.

Many UK mortgage lenders offer holiday let mortgages, including traditional high street banks and specialist lenders. Some of the well-known mortgage lenders that offer holiday let mortgages are:

What kind of mortgage do I need for a holiday home?

A holiday let mortgage is specifically designed for properties that will be rented out as short-term holiday accommodation. This type of mortgage considers the potential rental income you can earn from the property, as well as other factors like occupancy rate and the location of the property.

As lady considering what type of mortgage to get for her Holiday Let.

How much can I borrow for a holiday let?

The amount you can borrow for a holiday let mortgage depends on your individual circumstances and the lender you are working with.
Generally, you can expect to be able to borrow up to 75-80% of the property’s value.
If you have a strong financial profile and a good track record of managing holiday properties, you may be able to borrow more.

Do I pay stamp duty on holiday lets?

Yes, you will need to pay stamp duty on holiday let property, just like any other property purchase. The amount of stamp duty will depend on the value of the property. As this property will likely be a second home, you will also need to consider the surcharge of 3% which will apply. You can calculate you stamp duty liability here.

How much deposit do I need for a holiday home?

As with any other mortgage, the deposit you will need for a holiday let mortgage will depend on the lender’s requirements and your financial profile. Generally, you can expect to need a deposit of at least 25% of the property’s value.

Are holiday lets exempt from council tax?

No holiday lets are not exempt from council tax. However, if the property is only available to rent for short periods, you may be eligible for a reduced rate council tax, known as the business rate.

How much profit does a holiday let make?

The amount of profit you can make from a holiday let property depends on various factors, such as the location, size and popularity of the property. However, many holiday let owners are able to make a significant profit, especially during peak holiday periods.

How do I qualify for a holiday let mortgage?

To qualify for a holiday let mortgage, you may need to demonstrate that you have experience in managing holiday properties or other types of rental properties. You will also need to provide evidence of your ability to generate sufficient rental income to cover the mortgage repayments.

What insurance do I need for a Holiday let?

You will need specialist holiday let insurance to cover your property, as standard residential insurance will not be sufficient.
This type of insurance will cover you for issues like accidental damage, loss of income, and liability.

How many months a year can you live in a holiday home?

As the owner of a holiday let property, you are not restricted in terms of how long you can spend in the property. However, you will need to ensure that the property is available for guests to rent during the times that you are not using it for your own personal use.

Do I need a license for a holiday let?

The requirements for a license for a holiday let property vary depending on the location of the property. In some areas, you may need to obtain a specific license or permit in order to legally rent out your property to guests. It’s important to research the local regulations and requirements before investing in a holiday let property.

All your holiday let mortgage questions answered

At Prospect Tree Mortgages, we specialise in helping clients find the best holiday let mortgage deals to suit their unique circumstances. Our team of experienced independent mortgage brokers can guide you through the entire process, from finding the right lender to securing the best interest rates and repayment terms.

When it comes to financing your holiday let purchase, it’s important to work with a team of experts who have a deep understanding of the industry and the unique challenges that come with this type of investment. With the right guidance and support, you can make a smart investment in a holiday let property and start generating a significant return on your investment.

Contact Prospect Tree Mortgages to learn more about our holiday let mortgage services.