The property is purchased with the intention of being let out to guests on a short-term basis. You might use platforms like Airbnb or a holiday rental agency to manage the bookings.
Lenders typically have specific requirements for holiday let mortgages, which may include:
You typically need a larger deposit than for residential mortgages, often between 25% and 40% of the property’s value.
Instead of basing the loan on your personal income alone, lenders will assess the potential rental income of the holiday let property. They may use projected income during peak times and allow for quieter months.
Holiday let mortgages allow you to use the property yourself for part of the year, provided it is let out as a commercial holiday let for the remainder of the year.
Holiday let mortgages may have slightly higher interest rates than standard residential mortgages due to the higher perceived risk of short-term lets. The loan terms may vary from lender to lender, typically around 20-30 years.
If the property meets the criteria to be classed as a Furnished Holiday Let (FHL) by HMRC, you can benefit from certain tax advantages
Overall, holiday let mortgages provide a way to own a property that can generate income through short-term rentals, but they come with additional criteria and responsibilities compared to standard buy-to-let mortgages.
Holiday let mortgages have their own criteria and not every lender understands the market. We do. Get in touch and we’ll talk you through your options honestly before you commit to anything.
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