Mortgages For Holiday Lets
Buying a holiday let might seem like a straightforward decision, but organising the mortgage finance is quite tricky. Depending on how you want to manage the property, the type of mortgage you need is different.
If you are planning to let out the property all year and not stay in it yourself, you might suppose that you would need a buy-to-let mortgage, however, this type of loan is not flexible enough to accommodate homes let out on a series of short-term lets to holiday-makers.
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Typically, you would need a holiday let mortgage for this. This allows you to charge a higher rent for the months in the high season and school holidays for example, but flex these rents down in low season.
Letting property out on this short-term basis can be really attractive, as usually you can earn a far higher annual rental income than you would by letting out the property on an assured shorthold tenancy agreement for 12 months. However, there are other risks to consider - with a long-term tenant, the risk that you don't receiver rental income one month is low. With a holiday let, there may be multiple weeks in the year that the property is empty.
However, you will still need to pay the mortgage each month, so the lender will want to see that you can afford to do this.
To work out how much you can borrow, the lender will also look at the actual income achieved on holiday homes in the area. It's also likely that you'll need a fairly large deposit as the number of lenders offering holiday let mortgages at a high loan-to-value (above 70 per cent) is small.
Additionally, because of the risk that the property is empty for some of the year, you may be asked to show that you earn over a minimum amount - usually £20,000 a year - and that you can afford to repay all or part of the holiday let mortgage each month in addition to your other regular financial commitments.
Some lenders also want to see that you already own a home and pay your mortgage reliably.
It's a good idea to speak to a specialist about the options available, as often these mortgages are available from smaller, local building societies. Knowing which lender is likely to help you is important before you make your application as being unsuccessful can hurt your chances of being accepted by another lender.
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|1.49%||Tracker||2 years||5%||4.7%||2 years||£1999|
*APR = Annual Percentage Rate *ERC = Early Repayment Charge
*These figures are only illustrative. An assessment of your needs will be confirmed before a recommendation can be made. A Key Facts Illustration, which is personal to your circumstances, will be provided if a recommendation for a mortgage product is made.
In assessing your requirements, we do not use credit scoring and we can provide an accurate estimate of the amount of borrowing and the viability of your requirements, without effecting your credit score.
We avoid credit searches at the initial stages given that numerous credit searches will impact your ability to access cheap credit. It is clear that too many credit applications in a short period of time will impact your score and whilst it is important to shop around, formal applications for a mortgage can trigger rejections, as it gives the impression you may be desperate for credit. It is essential when making enquiries for any financial product, that the Company does not credit score you, until such time as you have agreed to make a formal application.
We can indicate your chances of approval prior to any application being made and where necessary, can obtain decisions in principle from lenders who do not use credit scoring.
Typically we assist customers who have a number of financial commitments and they are looking to understand how much they can borrow. A number of mortgage calculators are used on the Internet, which provide an indication of the amount of borrowing based on an income multiple. In reality, the calculation is much more complex and varies borrower to borrower and lender to lender. For example, a mortgage calculator may indicate a 4 times income multiple, but given the particular individual circumstances of the client and the lender’s chosen criteria and underwriting, the borrower may actually achieve 6 times income. In contrast, a mortgage calculator may indicate 4 times income, but due to an applicant having financial dependents, certain types of income, such as bonus or commissions, or other financial commitments, the specific lender may only allow 2.5 times income.
Clients we assist tell us from the outset, they would like a guarantee of the amount they can borrow and our knowledge of specific underwriting policies within lenders, allows us to accurately estimate, exactly what is available.
Importantly an initial discussion and agreement through us, does not impact your credit score
Capital Fortune are award winning London based mortgage brokers. We are based in the heart of London’s financial district near the Bank of England. We offer advice to first-time buyers, those moving house and to those looking to re-mortgage their existing deal to get a better mortgage rate.
We’re not tied to one lender so you can be sure we’ll get the best deal for you, from the bank or building society right for you.
We provide finance on both residential and Buy to Let property and can assist whether your looking to buy your first home, looking to re-mortgage or refinancing and restructuring your portfolio of buy-to-let properties. Our advisers are here to help.
We advise customers nationally from the Scottish Islands to the Isle of Wight and cover all the regions within the United Kingdom, including Northern Ireland.
Typically, we best assist clients with non-standard requirements and those we successfully help, generally face some sort of difficulty in the mortgage market. They seek not to be penalised for this difficulty and we look to secure them highly competitive, mainstream rates by asking our lenders to take an holistic view of their circumstances.
As expected, we offer all the usual mainstream products all standard mortgage advisers offer, but more importantly, we look to place cases of a more complex and specialist nature. This includes the self-employed, those with difficult income streams, contractors, unusual properties, foreign nationals, British ex pats abroad, overseas diplomats and those recently divorced.
We have long term relationships with nearly all the major UK lenders and have built strong trusted connections with lender underwriters at both a local and national level. Many of these key partners, prove the key to the success sometimes extending the parameters of their advertised lending criteria to assist our clients.
The promise of a rate is not the same as actually delivering a formal mortgage offer in the exact same terms. Our promise is our guarantee and many of our published independent client testimonials, confirm our ability to both deliver and help.
Alongside mortgage finance, our advisers will find you competitive life insurance, critical illness cover and income protection as well as being on hand to advise on a range of company and business insurance options.
Your Capital Fortune broker will be regularly on hand, not just through the process, but afterwards, sometimes, when you may need us most. We don’t just want you undertake the one transaction with us but seek to build a long term relationship and many of our clients have been with us for many years.
We seek to ensure the best possible results for those who choose to use us.
We totally appreciate we are not right for everyone. There are a range of other mortgage brokers in the UK but we hope that on searching through our website, viewing our published rates and transparency, that you will obtain a clear sense of how we operate and how we will look to assist you obtain the most affordable and suitable deal.
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