Holiday lets are a popular commodity these days. People have been forced to choose from a limited number of locations abroad and have instead opted for a staycation. They are so in demand that landlords have even forced long-term tenants out of their properties in Cornwall and Kent to house holidaymakers instead. The pandemic has seriously shaken up the property market.
For investors looking to get involved, now is the time to do so. But one area you must be well informed on is the specialist holiday let mortgages that enable you to get started – your ticket to success. Knowing what to expect then, the benefits and downfalls, as well as other key aspects, will be vital when going to apply.
There is usually a set of criteria relating to what you can and cannot borrow. This may include factors such as your age, lending area, loan to value (LTV) ratio, loan size, payback terms and other possible requirements. Your holiday let is also taken into account, in addition to who is letting and the types of properties which are acceptable.
No two lenders are alike, however. One may have a lower minimum loan size, and another may not. You will find another to have utterly different lending areas or even fixed rates. What you should be doing then is comparing and contrasting these sets of criteria to know which one suits you best.
Going in with the correct info can make sure you avoid any hiccups when you go ahead and apply. Say if there is one area you neglected to take into consideration when applying. You will be pushed back, rejected at the first hurdle for not adhering to the proper requirements. Go over and read each point carefully. Then check over all your details to make sure they fit correctly.
Assess your situation
Identifying what you actually need for your holiday let can boil down to a number of questions. You need to ask yourself what you need from your mortgage. What size deposit do you have? How does that fit in with the lender’s LTV? Is the property leasehold? Being able to answer these confidently will mean you are ready to apply.
If you cannot, then go back to the drawing board and make sure you are fully prepared to take that final step. While doing so, you may even come across other considerations you may not have regarded. Speak with others about it, too, and ensure that you do not miss a thing.
First of all, the minimum and maximum amounts shouldn’t affect your situation whatsoever. They typically start at around £75,000 and can go as high as £2 million – perhaps even higher.
Several properties are welcome too. For example, Airbnb properties may be accepted, as would cottages or perhaps a log cabin. Whatever holiday let you have, it is likely to be on the list.
Multiple holiday lets can be included in the deal; there doesn’t need to be an owner-occupier, and some others even allow for the early repayment charge to be waived when selling. There are a wide variety of aspects that you can genuinely take advantage of to your benefit.
The fact that lenders are set to a maximum of 75% of the property may be a deal-breaker for many. You will need a deposit to pay the rest of the property, so check this area early on.
Criteria can be quite restrictive, as can be seen from the list mentioned above. The number of rules that are tacked on could well be too much. But they can be worked around comfortably.
Lastly, the process of applying can be time-consuming. It takes a lot of pre-planning and know-how to make it work. However, this is the least of your concerns considering the importance of securing that all-important holiday let mortgage.
Before you formally apply
After taking all of this into account, be sure to speak to a lender before applying. Understanding what they can do for you as well as clearing up any queries is relatively easy to do. A phone appointment can be made, and during it, you can settle any nerves.
Once getting all the answers you need, you can finally go about preparing that application.