Holiday Home Mortgages

Living in a modern and slick apartment in a busy city whilst holding down a high paying job are in the aspirations of many people whilst growing up, the fact is that most people who get to live in a swanky house in the city often want to escape the busyness, noise and pollution of a large city, one popular way of doing so is purchasing a holiday home in the countryside to escape to at weekends and in their time off in order to relax and breathe in the fresh air.

A holiday home mortgage can also be known as a second home mortgage or a holiday buy to let mortgage depending on its use.  Obtaining a holiday home mortgage can be a complicated matter and finding the right lender is an important decision.  There are more conditions and criteria’s involved in obtaining a second home mortgage.  The lender will need to consider numerous factors upon an application, especially the person’s current liabilities such as other mortgages under the same name, any other loans the person might have outstanding and their current credit rating.

It is highly advisable to carry out extensive research before investing in a holiday home.  Talking to a holiday home mortgage broker will give you some great advice regarding the prospect of applying for a mortgage on a certain property, also you will need to find out what type of mortgage and for what amount you will need.  It is important to find out if the purchase of your desired holiday home is feasible, make sure you know of any defects or repairs which may need to be carried out, these problems could eat into your budget.  Obtaining the services of an experienced holiday home mortgage broker can take away many hassles and worries as they are very knowledgeable and can advice you on all aspects of obtaining a mortgage for a holiday home.

Purchasing a holiday home can lead to numerous advantages; it’s a great way of experiencing weekend breaks, especially if the holiday home is in a peaceful location.  If the holiday home is not being used for an extensive period of time, it can be rented out to a tenant, this is a sensible way of earning extra income to help pay the mortgage; it can also lead to long term profits.  Purchasing a house which has potential for growth in value is essential, if the time comes to sell the property, it can be sold for a handsome profit in the future.

Holiday Home Mortgages - Five Points To Consider

Owning a holiday home is a special dream for many of us.  But unless you have plenty of spare cash, you will certainly need a holiday home mortgage to buy it.

Holiday home mortgages are only offered by a limited number of lenders, although the number is increasing.  Rather than trailing round large numbers of lenders asking if they lend on holiday homes, you would be better off going to a holiday home mortgage broker, who can point you in the right direction straight away.

As you plan your holiday home mortgage, you have decisions to make.

1. Holiday homes in the most popular parts of the UK have become so expensive that they may be out of your reach.  Try looking in less well known, but still very beautiful, areas such as Northumberland, the Yorkshire Wolds or South Wales.

2. Holiday home mortgages usually provide a maximum of 70-80 per cent of the property value, so you will need a deposit.  You may be able to find this by using the equity on your existing property.

3. Holiday home mortgages can be capital repayment or interest-only mortgages. Obviously a repayment mortgage is preferable in many ways – it means you can get it paid off more quickly and the home will be yours.  However, you have to consider whether you can afford repayments at that level, especially if you still have a mortgage on your main property.  With an interest-only mortgage, the repayments will be more affordable, but you will have to find some way of repaying the capital.  It’s a good method to choose if you are expecting an inheritance at a later date.  Of course, you may be planning to retire to your holiday home one day, in which case you can use the proceeds of selling your main home to repay the capital.

4. You have to decide whether you plan to keep the property only for the use of yourself and your friends and family, or if you hope to let it out.  If you fancy letting it out now and again to help pay the mortgage, you need to check with the mortgage lender if this is acceptable.  If you are actually purchasing it to use as a holiday let business, which has tax advantages, this will be a different type of mortgage.  In this case the lender will be looking more at the rental income potential than at the actual property value or your personal income, when deciding how much to lend.  This is a specialised type of holiday home mortgage so talk to your mortgage broker for advice.

5. In the current financial and property climate, you would be more sensible to look at your holiday home as something to enjoy and to give you pleasure, rather than as an investment.  If it does appreciate in value, or provide a useful rental income, this is a bonus.  But choose an area where you like to go on holiday, and furnish the home the way you like it.

You want to enjoy your holiday home and keep hassle to the minimum.  Holiday home mortgages are easier to get hold of than they used to be, but you need to be very clear in your mind what you want and how you are going to pay for it.  Your mortgage broker is always there if you need advice.  Don’t risk coming up against snags, or getting involved in financial or legal tangles that could wreck your dreams – take advice first, and stay on the right track.

Holiday let mortgages

Holiday let mortgages are suitable for properties that are to be used primarily for holiday lettings. These can be fantastic investments as the peak season income can be very high.

There is more work involved in running a holiday let rather than a buy to let, but there are several advantages. With a buy to let property the tenant has to sign an Assured Shorthold Tenancy (AST) agreement. This normally lasts 6/12 months.

Now a holiday let property will have a high turnover of tenants as people will generally only holiday for 1-2 weeks at a time. After each visit the property will need to be cleaned and re-stocked. You will also need to maintain the gardens, grounds and take care of the rubbish and window cleaning etc.

But if you own a holiday let property then you can use this for your own family holidays when the property is empty. Thus reducing your family holiday budget.

The lettings income generated from a holiday let will differ according to location, facilities and the property condition. It pays to invest a little to upgrade your holiday let to 4 or 5 star accommodation as you can then charge more rent.

The income generated is liable for tax but you can offset the running expenses of the property to reduce the tax bill. The interest element of a holiday let mortgage or other finance taken out to purchase the property can also be included as an expense. If your property qualifies as a Furnished Holiday Let then special tax rules apply. The main advantage is that any income loss that the property makes can be offset against your personal income thus reducing your own tax bill!

As a Furnished Holiday Let is classed as a business by the Taxman you will also have use of the new Entrepreneurs Relief which reduces the tax payable when you eventually sell the property.

Gaining mortgages for holiday let properties is a little trickier than normal. Most high street lenders will not allow the property to be rented to holidaymakers as they need an AST in place. However, as a specialist holiday let mortgage broker we know the lenders in this market and can arrange holiday let mortgages and holiday home mortgages with ease.

We can also cater for the more exotic holiday lets such as castles, barn conversions and lighthouses!�