To help you explore your options, below is a rough guide to some key mortgage criteria, taken from a broad view across the holiday let mortgage market. Please be aware that Covid-19 is having a profound impact on current holiday let mortgage lending and the number of lenders currently serving the market is reducing rapidly.
The following is accurate at the time of writing, but is subject to change:
- Maximum Loan To Value (LTV) is normally around 75% and whilst slightly higher levels might be possible, they normally result in much higher interest rates.
- Maximum loan size is usually limited to around £750,000 for low LTV’s and again, whilst higher is possible, it often comes at a cost in terms of interest rate.
- Lowest initial interest rates start at around 2.45% usually on a fixed or variable rate for a 2 year period, excluding all fees. Such low rates are only available for “perfect fit” clients where both the property and customer profile are considered to be low risk by the lender and the LTV is low at around 60% or less.
- Minimum joint income is normally expected to be above £30,000, but can rise to over £80,000 for the better deals and those mortgages with higher LTV’s or bigger loan sizes. If you are self-employed, expect to be able to demonstrate at least 2 years of good trading results.
Please note that these are examples only and are not any suggestion or guarantee that you will be able to get a mortgage offer. We are just trying to be helpful!
Updated: April 2020