With staycations becoming more popular, buying a property to let out to holidaymakers is becoming more attractive. If you’re a prospective landlord who’s thinking about buying a holiday home to rent out, we’ve put together a list of things you should know before you get started.
Getting a mortgage for a holiday let property
Getting a mortgage for a holiday let property is a bit different to getting one on a residential property. These are some of the differences:
Letting rates
A prospective lender may ask you to provide proof of typical weekly letting rates for the property so that they can see that there’s sufficient demand and that the income will cover the cost of the mortgage.
Minimum income threshold and deposit
Many lenders will ask for applicants to have a minimum personal income of £25,000 per annum and at least a 25% deposit. This provides additional assurances that the costs of the mortgage payment could be covered if the expected rental income is not achieved.
Tax implications
Because a holiday let property is a business, it may be subject to additional tax benefits or liabilities. You should seek advice from a qualified professional to find out what the tax implications would be for you.
Associated costs
In addition to the mortgage, there are other costs that you’ll need to be prepared for when investing in a holiday let property:
Furniture
As well as the general maintenance and repair costs that come with owning a rental property, a holiday home will need to be fully furnished for your guests, so you should make sure this expenses are incorporated into your budget too.
Having a stylish and attractively furnished home will also make it a more desirable place for holidaymakers to stay when choosing a property for their break away. As the furniture will be used by many different people, going for more hard-wearing and quality furniture means it’s more likely to stand the test of time and there won’t be additional costs to replace big ticket items such as beds and sofas regularly.
Marketing
If you want to stand the best chance of making sure your property is rented out for as much time as possible, you’ll need to set funds (and time) aside for things such as professional photos, a website, advertising and social media to make it visible to potential holidaymakers.
Management
Like a standard buy-to-let property, you’ll need to decide whether you want to be a hands-on or would prefer to outsource this to a management company. Hiring someone to do this for you will mean that you’ll earn less as you’ll have to pay a percentage of your rental income to the management company.
Insurance
As with any property, it may be advisable to take out an insurance policy protect against damage, however there are other things that you may want or need to be covered for, like theft or cancellation. As part of the mortgage process, our team of qualified mortgage advisers will be able to advise you of exactly what cover you’ll need.
Expert Advice
Our mortgage advisers can offer you advice on getting a mortgage to buy a holiday home, and will be on hand to guide you through each stage of the process. If you’d like to get in touch to book an initial consultation, call us on 01947 859211 or send us an e-mail.
Meet our mortgage advisers in Whitby
Your property may be repossessed if you do not keep up repayments on your mortgage.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
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