Holiday Let Mortgages
What is a Holiday Let Mortgage?
A type of loan designed for purchasing or refinancing a property that will be rented out as short-term accommodation to holidaymakers.
Why Choose a Holiday Let Mortgage?
Lenders assess the projected rental income, location, and demand for short-term stays to determine the mortgage terms.
How Holiday Let Mortgages Work
When applying for a mortgage for holiday let, you may have the option to choose between a capital repayment or interest-only loan, depending on the lender.
Holiday Let Mortgages at a Glance
Eligibility:
Individuals or businesses including trading businesses or commercial buy to let (also known as an investment property)
LTV:
Up to 75%
Loan Amounts:
From £50,000 +
Interest Rates:
From 3% per year
Repayment Types:
Capital repayment and Interest Only options
Terms:
5 – 25 years.
Repayment terms:
Monthly repayments. Capital or interest only options.
Acceptable Security:
Any commercial or semi-commercial property considered.
Holiday lets can offer high returns for investors, especially in popular tourist destinations. With the rise of staycations and platforms like Airbnb, short-term rental demand has soared, making holiday let properties an increasingly attractive option. At Elite Business Funding, we specialise in helping investors secure holiday let mortgages that are tailored to their needs.
Whether you’re looking to buy your first holiday let or expand your existing portfolio, our team of experienced mortgage specialists will guide you through the process from start to finish. We work with a wide panel of UK lenders to ensure you get the most competitive rates and terms. From the initial consultation to mortgage approval, we’re with you every step of the way.
What is a Holiday Let Mortgage?
A holiday let mortgage is a type of loan designed for purchasing or refinancing a property that will be rented out as short-term accommodation to holidaymakers. These differ from standard buy-to-let mortgages, which are intended for longer-term tenancies. To qualify, the property must typically be available for let for a minimum number of days per year and must be let out to paying guests for a minimum proportion of that time.
The unique nature of short-term lets, with their variable income and seasonal demand, means that lenders take a different approach when assessing applications for holiday let mortgages. Rather than relying solely on your personal income or long-term tenancy agreements, lenders often assess the projected rental income that the property is likely to generate during peak and off-peak seasons.
How Does a Holiday Let Mortgage Work?
Mortgages for holiday lets are based on the property’s income potential from seasonal bookings. Lenders assess the projected rental income, location, and demand for short-term stays to determine the mortgage terms. Here are some key points to consider:
- Property Usage – The property must be available for a minimum number of days per year (usually 105 days) and rented to holidaymakers for a significant portion of the year. This ensures the property qualifies as a holiday let and not just a regular buy-to-let.
- Projected Rental Income – Lenders focus on projected rental income rather than personal income or long-term tenancies. They look at the location’s popularity, past rental figures, and your ability to generate consistent income from short-term lets.
- Loan Terms – Normally, LTV for holiday let mortgages ranges from 60% to 75%, which means you’ll need to provide a deposit of between 25% and 40%. Interest rates are generally higher than buy-to-let mortgages due to the increased risk faced by lenders.
- Flexibility of Repayment Options – When applying for a mortgage for holiday let, you may have the option to choose between a capital repayment or interest-only loan, depending on the lender. This flexibility allows you to manage your cash flow according to your financial situation and investment strategy.
- Limited Company Holiday Let Mortgages – Purchasing a holiday let through a limited company can offer tax advantages and limited liability. These mortgages allow investors to benefit from corporation tax rates and offset certain expenses. At Elite Business Funding, we can help you access the right lenders for limited company holiday let mortgages.
Holiday let mortgages can be a great investment opportunity, especially with the increasing popularity of short-term rentals. At Elite Business Funding, we offer expert guidance to help you secure the best mortgage terms, whether you’re purchasing through a personal or limited company structure. Get in touch with our team to find out more.
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