The difference between a buy to let and holiday let mortgage
A holiday let mortgage caters specifically to properties that are rented for short durations, providing greater flexibility in assessing the property's income potential
Increased earning potential
Investing in a second property as a holiday let can boost earnings by up to 50% per week, reducing the time it takes to recoup the investment
Capital appreciation
In most locations, holiday let properties tend to appreciate in value more quickly compared to primary homes. This means by investing in a holiday let, you stand a higher chance of making significant profits should you decide to sell your property later on
Deposit
In almost all cases you’ll need at least a 25% deposit to get a holiday let mortgage (although some lenders will accept 20%). For example, if you were to buy a holiday property valued at £300,000, you would usually need a minimum deposit of £75,000
Loan to value ratio
Loan-to-value (LTV) is the loan amount compared to the property value. E.g., if the property is worth £300,000 and you want to borrow £225,000 (with a 25% deposit), the LTV would be 75%. Holiday let mortgages typically have LTVs ranging from 60% to 75%
Income forecast
To obtain a holiday let mortgage, a reputable holiday letting agent must provide an income forecast that outlines expected low, medium, and high seasonal rental earnings for the property over 30 weeks. cottages.com can provide a FREE income forecast
If refurbishment is required
You might consider exploring the option of a bridging loan for properties that need refurbishment before generating holiday let income. It provides funds without immediate mortgage payments. Loan is repaid at the end of the mortgage term with interest
