Many of us when on holiday have a look in the estate agents window and dream that one day we might be able to live there for one long holiday. For those up with technology maybe you just check rightmove on your phone! Sometimes it makes you think how much you are paying for a holiday compared to a monthly mortgage payment if you owned it.
There are a few lenders who will allow you to buy a second home, if it is to rent out they will take into account the likely rent that you will receive to help towards proving the mortgage is affordable. Most lenders will only lend 75% maximum of the value of the property, so you would need to find a quarter of the price to put down yourself. Although there is a possibility, if you have equity in your current home, you could increase that mortgage to provide the deposit amount. As the mortgage is for a holiday let, interest rates are not quite as competitive as those for mortgages for homes that you live in yourself. We have secured rates at 2.99% – 3.5%. The mortgage can be arranged on an interest only or a repayment basis. There are also fees that apply and don’t forget you will be paying the higher rate of stamp duty as well as solicitors costs.
Some lenders base their calculation on the maximum they will lend based on the average rent in low, medium and high rent weeks. They assume it could be rented for 40 weeks of the year and make a calculation based on that.
We have been able to make the dream of buying a holiday home reality for a few of our clients this year.
So if you dream of buying a place by the sea, or in your favourite holiday destination we may be able to help. Why not give us a call?