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Holiday Let Mortgages
Holiday let mortgages have launched, they’re designed for properties which will be let out on a short-term basis as holiday accommodation. The flexible way for your clients to invest in a growing market.
With staycations on the rise and economic uncertainty making traditional buy-to-let a less attractive option, short-term holiday lets could be a great way to get a solid return on property investment. Rather than worrying about tenants, your clients can start thinking about weekend guests and earning super host status.
With the holiday let market forecast to grow 4% year on year, your clients could make a holiday home work for them. Of course, this is a specialist market requiring plenty of flexibility when it comes to finding the right mortgage. The Hodge Holiday Let Mortgage provides that flexibility.
Holiday let mortgage criteria:
- Lending from age 21 to 95
- 75% LTV up to £1.5 million
- Day 1 re-mortgages
- Two year and five-year fixed rates available
- No minimum personal income requirement
- For holiday properties in England, Wales and Scotland.
Benefits for clients:
- Airbnb properties welcome
- Can stay in the property for up to 90 days
- Don’t have to be owner occupier
- Can add up to four properties to the same mortgage
- The Hodge Early Repayment Promise – early repayment charge waived when selling
To find out more, please download our product summary
For a Decision in Principle complete our Holiday Let Mortgage Application.
To be eligible, your client will need to meet the minimum holiday let mortgage criteria at the time they make the application.
Client lending criteria:
- Minimum borrowing age – 21
- Maximum borrowing age – 88
- Maximum client age – 95
Applications can be made by one or two people.
Interest cover ratio
There are no minimum personal income requirements for holiday let mortgages, but your client will need to show the property can yield a minimum rental income of 145% of interest payments at 5.5%.
We take an average of 30 weeks rental income using an average of the weekly high season, medium season and low season rental income figures they provide on the application form.
If the property has previously been let out, we’ll also verify the rent by comparing the previous 12 months actual rental income with those from a local agent or holiday letting website.
Property lending criteria:
- Minimum property value – £150,000
- Maximum property value – £10,000,000
- Properties with land up to 10 acres. We’ll review properties on a case–by–case basis up to 50 acres but won’t accept properties with more than 50 acres
- Leasehold properties with a minimum 90-year lease. And we’ll also lend to clients who wish to use the funds to extend a lease
- Encumbered properties, subject to full clean first charge
- Flats, maisonettes and studio flats with a minimum of 35 sq. m, but not freehold flats. We’ll review flats above commercial premises on a case–by–case basis. We don’t accept ex-local authority flats
- Multiple units – up to four units in the same block
- Whole properties listed for rent on Airbnb, with relevant insurances in place.
If your client doesn’t meet the holiday let mortgage criteria, we’re happy to review each case to see if there’s anything we can do to help your client, so please get in touch with our Adviser Support team on 0800 138 9109 if you have a query.
Our business hours are 8am – 6pm Monday to Friday. Calls may be recorded for training and monitoring purposes.
For a Decision in Principle complete our Holiday Buy to Let Mortgage Application.
What’s the difference between a holiday let mortgage and a buy to let mortgage?
A holiday let mortgage allows clients to purchase a property they can rent out to people on a short-term basis for holidays. It differs from a buy to let mortgage that expects rentals to be more long-term.
This difference affects the way a lender calculates the affordability of a holiday let mortgage. With the holiday let mortgage the lender will take into account that the property isn’t always let out year-round and that rental income will fall and rise depending on whether it’s high or low season.
This means that a client who needs a mortgage for a holiday home is more likely to meet the lending criteria for a holiday let mortgage compared to a buy to let mortgage that assumes the property is rented out for six to 12 months at a time.
How much can my client borrow?
We can lend up to 75% LTV on both our two year and five-year fixed rate mortgages with loans from £50,000 to £1.5 million.
The actual amount we lend is determined by your client’s ability to afford the loan based on their expected holiday let rental income.
Your client will need to show that the property can yield a minimum rental income of 145% of interest payments at 5.5%. We take an average of 30 weeks rental income using an average of the weekly high season, medium season and low season rental income figures they provide on the application form.
Will you lend on properties listed on Airbnb?
Yes, as long as the whole property is rented out and it meets all our eligibility requirements.
Can my client mortgage more than one holiday let property?
Yes, they can have up to four individual holiday let mortgages. We can also provide a single holiday let mortgage for up to four properties under one title.
Can my client still use the property as their own holiday home?
Yes, your client can occupy the property for up to 90 days in any one year for personal use.
Can the mortgage be repaid at any time?
Yes, the loan can be repaid at any time, but an early repayment charge will apply. We waive this charge if the property is being sold.