Having the wrong mortgage for your holiday let could cost you a packet

Here’s a cautionary tale for those people with holiday lets.

We are often called by new clients to sort out the mess caused by other mortgage advisers. Typically, this will be selling a buy to let mortgage when what’s really needed is a holiday let mortgage. After all, the property will be let to holidaymakers and run as a holiday lettings business so it’s clear what is required. The client gets almost to the point of exchanging contracts when the lender finds out that the property is a holiday let and not a buy to let and so immediately withdraws the mortgage offer. We then have to run around to secure appropriate holiday let finance so the purchase does not fall through.

Well today we were contacted by a new client who has an existing Coventry buy to let mortgage on a holiday let. Coventry have found out that the property is used solely as a holiday let, which they of course do not lend on. Being the kind souls that they are, they have informed our client that she has infringed the mortgage terms and would she please repay all of the mortgage as soon as possible.

Fortunately, we are able to replace the Coventry buy to let mortgage with finance that is suitable for a holiday let. Unfortunately, the client now has to pay all of the fees and costs for a new mortgage to replace the buy to let she has had for less than 12 months.

If appropriate mortgage advice had been given at outset this client would not need to quickly raise finance to pay off the Coventry buy to let mortgage. The only redeeming factor is that the Coventry deal does not have Early Repayment Charges.

Always ensure your mortgage broker is fully aware of what you require and ask them to confirm that the mortgage suggested is completely suitable for your requirements. If in doubt walk away and seek alternative mortgage advice.

For more information on Holiday Let Mortgages please visit www.holidayletmortgages.co.uk

Applying for Holiday Home Mortgages

If you are familiar with the concept of buy to let mortgages, you may be under the assumption that holiday home mortgages are pretty much identical. This is actually a false assumption, as holiday home mortgages are something of a strange product which spans both personal lending and commercial lending spheres.

Lenders will tend to view holiday home mortgages as being a product which is essentially going to create a commercial business in the form of short term holiday rentals of the purchased property. In this case, a different set of criteria comes in to play when discerning the acceptability of an application and in calculating the level of finance that will be made available. So we have a lending product that is one the one hand, clearly a commercial loan and on the other, a product that is more often used by individuals to secure holiday property with no plans of establishing a major business venture.

The entire idea of purchasing residential property to use as buy to let accommodation has become increasingly popular over the last decade. In an effort to expand the possibilities even further, people have begun to look at holiday accommodation to be purchased and used in the same way, holiday home mortgages are specifically designed to enable this form of property investment. One of the major benefits of investing in holiday accommodation is that the income will often be far higher than a similar buy to let residential property. Holiday makers pay far higher prices for a single week’s accommodation than most residential tenants and holiday home mortgages have been designed to take this into account. The vacation market is also perceived to be more stable, and it is deemed less likely that a property will sit empty for an extended period of time; all of these factors affect the application for holiday home mortgages.

In a similar fashion to buy to let mortgages, holiday home mortgages will often provide only around 70% of the overall purchase cost of the vacation property. Applicants for holiday home mortgages will have to find a significantly larger deposit than they would with a traditional residential mortgage. Additionally, many lenders will insist upon a minimum amount of equity in the property that is going to be purchased.

Holiday home mortgages represent an excellent way for individuals to obtain additional property assets which are able to pay their own way. Often the only outlay will be the actual deposit amount, with holiday accommodation being turned over to a management agency and turned in to a profit making venture within a short period of time.

Holiday home mortgages are a relatively new form of financial product, and the entire market is yet to be exploited to its capacity. If we consider the growth in the buy to let marketplace over recent years, it is clear to see that using holiday home mortgages to purchase short term rental holiday accommodation could well become the next big thing.

For more information on holiday let mortgages or holiday homes mortgages please visit www.holidayletmortgages.co.uk

Holiday Let Mortgages

Unlike more conventional buy to let mortgages, holiday let mortgages can be significantly more difficult to arrange. A vast majority of major lenders will not finance the purchase of a property that is primarily going to be let as short term holiday accommodation. Additionally, holiday let mortgages are deemed to facilitate a form of commercial enterprise, meaning further selection criteria may apply. In many ways holiday let mortgages are something of a hybrid financial product. On the one hand they are supporting a commercial venture and on the other hand they are being used by individuals who wish to expand their property portfolio.

The concept of investing in residential property via the buy to let market has become increasingly popular in recent years and people have been quick to indentify holiday accommodation as a possibly more lucrative and secure form of acquiring new properties. Holiday let mortgages allow the buyer to purchase a property with none of the associated risks of the standard buy to let business model. Holiday makers pay a premium for the use of holiday accommodation and they pay in advance, meaning more income being derived from a more secure stream.

Much like standard buy to let mortgages, holiday let mortgages will only usually provide 70% to 80% of the actual purchase cost of the property, borrowers will need to find a significant deposit from their own resources. Many lenders will also insist that the property in question has a minimum value of around £70,000 which in today’s property market is not such a large hurdle.

Holiday let mortgages can be a great way to achieve financial freedom by accruing property assets which quite literally pay for themselves. If we consider that the only initial outlay will often be the deposit, and that many properties will make sufficient income to fully cover the holiday let mortgage repayments, then it becomes clear that this particular form of investment is particularly attractive to those people who find they have limited funds.

The marketplace for holiday let mortgages is still fairly young and is slowly evolving into a mature field, much in the way that buy to let mortgages have developed over the past decade. Now is the time for those who are considering holiday let mortgages to act, right now the process of applying for this form of finance dissuades many people from entering the market, once the products have evolved and the application process becomes more streamlined, many people who were previously deterred from applying for holiday let mortgages are bound to revisit the option once more. The market will become flooded and the real bargains and profit will begin to dry up.

If you are seriously considering holiday let mortgages as an option to build your personal wealth by acquiring a portfolio of holiday accommodation, then you are advised to seek the advice of a professional broker, who will be able to assist you in finding the best holiday let mortgages for your needs.

Enhanced Wealth are a specialist provider of holiday let mortgages, you can visit our dedicated holiday let mortgage website here http://www.holidayletmortgages.co.uk