We want to buy a seaside flat as a second home. What type of mortgage is best?
Q My partner and I are buying a second home to use as a holiday home. He’s a first-time buyer but I’m not as I own the flat that we currently live in. We are hoping to buy a flat at the Kent seaside to be used as a holiday home for ourselves – think Monday to Friday in London, then the weekends by the sea – and potentially rent it out as a furnished holiday let when we’re not using it. We’re not looking to have it as a big source of income but just to potentially offset some of the costs of having a second home. Where I’m having trouble is deciding what type of mortgage to get. Residential mortgages don’t allow even short-term lets and buy-to-lets don’t allow you to live there. For tax purposes, we would not be letting it often enough to meet the furnished holiday let requirements, so would that mean a holiday let mortgage is not suitable either?ET
A No, it doesn’t mean that because a holiday let mortgage is exactly what you are looking for, according to unbiased.co.uk, which is the place to go to find an independent financial adviser. “If you want to buy a holiday home for yourself but also let it out when you are not using it, you need a holiday let mortgage,” the website says. Although growing in popularity, holiday let mortgages are still something of a niche product available from fewer than 20 mortgage lenders. As with most niche mortgages, it makes sense to get the help of a whole-of-market mortgage broker who knows the lenders that offer the kind of holiday let mortgage suitable for you.
Most holiday let mortgages expect you to be able to put down a deposit of at least 25% on a property, to generate rental income of at least 125% to 145% of the interest payable on the mortgage and to have a minimum income of
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