At Enhanced Wealth, we are specialists in offering mortgages. One of our range of products are holiday let mortgages and here are some of the questions we typically get asked …
Is a holiday let mortgage the same as a buy to let mortgage?
No. If you get a buy to let (BTL) mortgage on a property that is being used for a holiday let and your lender finds out, you could have to repay the whole mortgage amount, and any accrued interest, immediately.
Not only that, but you are committing fraudulent activity, by not using the property for the purpose that the mortgage has been approved for.
This highlights just how important it is to ensure that you have the ‘right’ kind of mortgage for your needs. So, a holiday let mortgage for a holiday let property – and a BTL mortgage for a let property, and so on.
Sadly, some owners of holiday let properties are unaware that they do not have the correct mortgage type for their property, having used an inexperienced or unscrupulous broker, who has simply arranged a BTL mortgage in order to get the commissions. That is why we always recommend you seek out the advice of a specialist provider.
Do I need special buildings insurance?
Yes, if you have a property used for holiday letting, then you need relevant insurance.
If you don’t have specialist holiday let insurance but use some other type of buildings cover (for example, traditional home insurance or landlords insurance), again, as with getting the ‘wrong’ type of mortgage, this puts you in a tricky position:
- if you need to make a claim on your policy and you do not have the relevant type of cover, then not only may your claim typically be rejected, but you could also again be classed as a fraudster
- if you are deemed to have undertaken fraudulent activity of any kind this could mean that you will have difficulty getting accepted for any further credit (such as mortgages and loans) as well as insurances
- even if you do have holiday let insurance and you make a claim, but you have a BTL mortgage, again, your claim could be rejected
How do I find a holiday let mortgage?
While some mortgage brokers will be able to help you find a mortgage for a let property, you may wish to use the services of a specialist broker, such as ourselves. This is because we have many years’ experience in arranging holiday let mortgages and have access to the very latest deals from an approved panel of lenders.
And because we are experienced, that means we can match your own individual circumstances to the most appropriate solution.
Can I get a holiday let mortgage for any property type?
Yes, generally, there are no restrictions on the type of property that we can arrange a mortgage for, providing other criteria have been met.
Usually, lenders ask that the property is habitable and can bring rental income from day one, but we do have access to some deals if you are looking to refurbish a property first and then let it out for holidays.
What’s the criterion for applying for a mortgage for a holiday let?
This varies depending on the provider, but as a rule of thumb:
- you will need to have at least 25-40% of the purchase price as a deposit
- you need to earn £20,000-£40,000 per annum, though exceptions do apply, for example, for retired people
- the gross rental income, i.e. before agents fees and other costs, of the property needs to cover at least 125% of the monthly mortgage payment
If you have any further questions, please do not hesitate to get in touch – we will be more than happy to help.