HOLIDAY LET MORTGAGES
UK Holiday Let Specialists
The Cumberland's business team specialise in holiday let mortgages across mainland UK - call us on 01228 403141.
Working with The Cumberland, who Dave has banked with for over 30 years, was an ethical decision, but the personal service we have received has been fantastic.
Hospitality Mortgage Reviews
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Your interest rate tracks the Cumberland Commercial Variable Base Rate (CVBR), currently 5.24%, less the discount shown for the first 3 years, followed by the CVBR until the end of the mortgage.
| Loan To Value | Initial interest rate for 3 years | Overall cost for comparison | Discount from CVBR | Follow on rate | Fee |
|---|---|---|---|---|---|
| 1.89% | 5.24% | £1,000 | |||
Representative Example:
A mortgage of £115,000 payable over 17 years initially on this variable rate product for 3 years at 3.35% and then on the Cumberland Commercial Variable Base Rate (CVBR), currently 5.24% for the remaining term of the mortgage, would require 36 monthly payments of £740.17 and 168 monthly payments of £834.09. The total amount payable would be £167,898 made up of the loan amount plus interest (£51,773), arrangement fee (£1,000) and other lending fees (£125). The overall cost for comparison is 4.8% APRC representative. What is a Representative Example?
Representative Examples include the costs associated with a typical mortgage from the Cumberland. They do not take into account the information your have input into this mortgage calculator and are therefore not specific to your circumstances. For a Key Facts Illustration, please contact us directly. |
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| 1.49% | 5.24% | £1,000 | |||
Representative Example:
A mortgage of £115,000 payable over 17 years initially on this variable rate product for 3 years at 3.75% and then on the Cumberland Commercial Variable Base Rate (CVBR), currently 5.24% for the remaining term of the mortgage, would require 36 monthly payments of £763.23 and 168 monthly payments of £838.18. The total amount payable would be £169,416 made up of the loan amount plus interest (£53,291), arrangement fee (£1,000) and other lending fees (£125). The overall cost for comparison is 4.9% APRC representative. What is a Representative Example?
Representative Examples include the costs associated with a typical mortgage from the Cumberland. They do not take into account the information your have input into this mortgage calculator and are therefore not specific to your circumstances. For a Key Facts Illustration, please contact us directly. |
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| 1.00% | 5.24% | £1,000 | |||
Representative Example:
A mortgage of £115,000 payable over 17 years initially on this variable rate product for 3 years at 4.24% and then on the Cumberland Commercial Variable Base Rate (CVBR), currently 5.24% for the remaining term of the mortgage, would require 36 monthly payments of £792.04 and 168 monthly payments of £843.08. The total amount payable would be £171,276 made up of the loan amount plus interest (£55,151), arrangement fee (£1,000) and other lending fees (£125). The overall cost for comparison is 5.1% APRC representative. What is a Representative Example?
Representative Examples include the costs associated with a typical mortgage from the Cumberland. They do not take into account the information your have input into this mortgage calculator and are therefore not specific to your circumstances. For a Key Facts Illustration, please contact us directly. |
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Lending Criteria
Our holiday let mortgage criteria
- Maximum mortgage term is 25 years
- Leasehold properties should have a minimum of 85 years left on the lease at the start of the mortgage and 50 years on maturity
- Borrowers to be EU Nationals resident in the UK or UK ex-pats
- Annual net rental income should be a minimum of 125% of the annual mortgage interest at 6.25% or 3% above the mortgage rate you are paying, whichever is higher. Lower levels of income will be considered where borrowers have additional sources of income
- Our product rates for up to 60% and 70% LTV are available for both new and established holiday let properties
- Our product rate for upto 75% LTV is only available for established holiday let properties. If your property will be a new holiday let, loans will be individually priced
- Loans where properties have occupancy restrictions will be individually priced and the maximum loan to value is 60%
- We lend throughout mainland UK (up to 75% LTV) and the isles of Anglesey, Arran, Mull, Skye, Harris and Wight (up to 60% LTV)
- Limited Companies incorporated outside the UK
- Property which is temporary or moveable
If you're a Limited Company, Trust or British Citizen living abroad, have properties with occupancy restriction, have four or more mortgaged properties or require a loan of more than £500,000, please contact us for a bespoke holiday let mortgage.
Next Steps
Holiday Let FAQs
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Is a holiday let for me?
Property investment can be a very effective way of generating income if managed correctly; however, it doesn’t come without its risks. If you plan to buy your property with a mortgage and you are relying on the rental income to make your mortgage repayments, you must consider how you will keep up the repayments if you do not receive sufficient rental income.
You also need to consider whether you can afford the cost of any major repairs as well as ongoing minor repairs and maintenance.
We would strongly recommend that you take professional advice before entering into any property related transaction.
You may also wish to contact a conveyancer (for advice on any legal implications of owning a holiday let) and an accountant (for advice on tax implications).
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What is involved in buying a holiday home to let?
Buying a property to holiday let is very different from buying your own home.
Consider the following before you start your search for a property
Do your research
Research the market, with the help of estate and lettings agents, who will be able to advise on demand and any other issues in the area you are thinking of buying in. The location of a holiday let property will impact its rental value. You also need to consider the travelling distance from your home if you are planning to personally run and maintain your holiday let.Ask an expert
Speak to an experienced holiday letting agency and make sure you have a professional opinion of the level of income and potential occupancy levels you can expect from the property and the area, as well as what standard of decoration and furnishings you will need to offer to obtain the required level of rent and occupancy. If you decide to register with a holiday letting agency, you should consider what services they will provide you with and the cost to you.Understand your finances
Keep in mind why you are buying the property – whether you are in the market for capital gain when you sell or simply monthly rental income. This will help you decide what to buy and where, and what kind of mortgage you need. You will need to consider your pricing – if you charge too much the property may be empty during the main holiday season, if you charge too little you may be fully booked but with insufficient profit to cover your mortgage and any other costs.Buy carefully
Make sure you buy a property which allows for sufficient profit margin. If you go for a ‘bargain’ property which requires considerable work, ensure that you have the time and finances to complete this. Paying more for a property which is in better condition and can be marketed immediately can be a wiser move.Check for safety
By law you must make sure that the property you are letting complies with various safety regulations, such as furniture and furnishings fire safety, gas safety, electrical equipment safety and that it contains a smoke detector. You will also need certificates to prove these regulations have been met.Be aware of new and updated regulations
Failure to comply with the law can result in serious consequences. The best way to make sure you are kept up to date is to use a holiday letting agency which can make you aware of them, while also ensuring you comply.Tax implications
A Holiday Let investment attracts several different taxes. Aside from Stamp Duty Land Tax, which you have to pay when you purchase any Holiday Let property, you may also have to pay Income Tax on the rent you receive and Capital Gains Tax when you sell the property. Rental income must be declared on a Self Assessment tax return. However, you can deduct costs such as mortgage interest and letting agency fees from the rent you receive first. And like anything else you own, a Holiday Let property will form part of your estate for Inheritance Tax purposes. There may also be tax advantages relating to any capital you spend in kitting out your property. We recommend that you speak to an accountant for further details.Marketing your Holiday Let
You can choose to market the property yourself, or use a holiday letting agency. It is important to ensure that your property is visible to potential customers searching online and that they can see anything which sets you apart from your competitors. -
How do I apply for a holiday let mortgage?
You may have found a property before you read this or you may not have started looking. No matter what stage you’re at you should speak with us before you commit yourself to a property, to make sure you can afford it and can raise the necessary finance.
To help us assess each application we may ask for some or all of the following:
- Background details of the applicants in the form of a C.V.
- Details of present/anticipated income and expenditure. We may request this to form part of a business plan incorporating a cashflow forecast and trading projections.
- Details of existing assets and liabilities.
- Recent certified/audited accounts.
- Recent statements on your bank/building society accounts.
The next step will be to fill in the mortgage application form. Once the mortgage application form has been completed, we will ask you to pay the mortgage valuation fee so that we can send a professional valuer to report on the property to make sure we can lend what you need.
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What happens next?
If you have not already done so, you will need to instruct a conveyancer to handle the legal details (procedures for buying property in Scotland are different from the system in England and Wales so it is important to contact a conveyancer at an early
stage for guidance).We will then check your application and obtain any necessary references and a valuation report. This usually takes two to three weeks, but we can normally give an
immediate “in principle” decision.We will then send you written confirmation of the mortgage. This is called the “Offer of Loan.” We will also send a copy of the Offer of Loan and our instructions to your conveyancer.
In certain circumstances the Society will need to obtain separate legal representation. We will explain this to you if appropriate during the application procedure.
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What will my monthly mortgage payment be?
The amount of the monthly mortgage payment depends on:
- How much you wish to borrow
- Over how many years you repay the loan
- The type of mortgage you choose
- The current interest rate
Take all these points into account and with the help of a written illustration you should have a good idea of how much your mortgage will cost each month.
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