Holiday Lets & Second Home Mortgages

At Fox Davidson, we can arrange for a number of different types of mortgages for holiday homes, including:

• Second residential holiday home
• Holiday lets
• Airbnb properties
• Holiday cottages
• Buy-to-let holiday homes
• A mix of own use and holiday let

Fox Davidson secure lending from £100,000 and work with lenders from the whole of the market, and are not tied to a panel of lenders.

We work with high street banks, building societies, private banks and broker exclusive lenders to secure market-leading holiday let finance for our clients.

• Up to 90% loan-to-value
• Interest-only and repayment options
• Loans from £300,000 with no upward limit
• Lending in England, Wales & Scotland
• Personal earned income above £30,000
• Lending based on income or annual rent

We can utilise lenders that work in two ways.

Firstly, we can use lenders that will work off your UK taxable income.

Lenders will deduct any existing mortgage and loan repayments from your income and then work out how much they can lend you.

Typically, we can secure five times your gross annual income (after deduction of debt payments).

For limited company owners, we can use your net profit before tax plus salary to gain a better lending figure.

Secondly, there are lenders that will only work off the income that the holiday rentals will achieve.

The lenders typically ask for an ARLA letting agent to confirm the annual rent (taking account of low and high season).

The rent will need to be approx. 130% of the mortgage payment at a nominal rate of, for example, 5%

WORKING EXAMPLE – RENT OF £2,000 pm  x12 = £24,000 PA. /130% /5% = £369,000 LOAN.

There are lots of small building societies that provide mortgages for holiday homes and a handful of high-street banks, too.

Other than that, it is specialist buy-to-let lenders that occupy the holiday home mortgage market.

When we discuss your options with you, we will match your situation and requirements to the lenders with the best terms and lending criteria for you to secure your ideal second home mortgage.

Simply put, we’ll make sure you get the best holiday let mortgage for you.

It’s important to note that you have two funding options, either a formal holiday let mortgage or a second home residential mortgage which you primarily use as your holiday home.

Holiday let mortgages are underwritten using an average of the low, medium, and high season holiday let income over a typical period of 30 weeks of the year.

• Max. loan-to-value 75%
• Interest-only and repayment options
• Fixed and tracker rates
• Loans from £100,000 with no upward limit
• First-time landlords
• No minimum income
• Typically, up to 6-bedroom properties with a handful of specialist lenders for larger properties
• Properties with holiday let restrictions accepted
• Personal name or Ltd company name ownership
• Airbnb lettings allowed

Second-home residential mortgages allow you to rent the property for a short period of time but are primarily designed for your own occupation.

Lending is based on your personal income and lenders will factor in existing credit commitments including your existing main residence mortgage.

• Max. loan-to-value 90%
• Interest-only and repayment options
• Fixed and tracker rates
• Loans from £100,000 with no upward limit
• Options to rent the property out, typically up to 90 days a year

Some mortgage lenders do allow you to rent out your holiday home using Airbnb.

Lenders will still average the income from the low, medium, and high season when working out affordability.

With the increasing use of online rental portals, such as Airbnb, many lenders are moving with the times and will allow you to use Airbnb to rent out your holiday home.

Holiday let mortgage Calculator

To work out how much you can borrow on a holiday let mortgage:

• Average the low, medium, and high season income over 30 weeks
• Divide by 130%
• Then divide by 5% = Max loan

Note that some lenders will use a rate below 5% and some lenders can utilise your personal income also.

The above is a general guide to how holiday let mortgage lenders calculate how much you can borrow on a holiday let mortgage.

There are a few select mortgage lenders that will lend on properties that have restrictions on them only being able to be lived in as a holiday home and not as a permanent main residence.

These restrictions are put in place to ensure that properties are used for holiday let purposes and whilst this decreases demand on the open market there are lenders who specialise in lending on this type of property.