Can I remortgage my holiday let?

Remortgaging a holiday let can be a great way to take advantage of better rates or terms, or to free up equity in the property for other investments. However, it’s important to understand the unique nature of holiday letting and the factors that can affect your ability to remortgage.

Why remortgage?

When you own a holiday let in the UK, remortgaging can be a great way to take advantage of better rates or terms. With interest rates fluctuating, there may be an opportunity to secure a lower rate than what you’re currently paying on your mortgage. This can help you save money on your monthly payments and over the life of the loan.

Another benefit of remortgaging is that it can provide you with extra cash by releasing some of the equity you’ve built up in the property. This cash can be used for a variety of purposes such as making improvements to the property, paying off high-interest debt, or even investing in additional properties.

A holiday let remortgage can also help you to adapt to changes in the market or in your personal circumstances. For example, if you are planning to make changes to your holiday let, such as adding more rooms or refurbishing existing ones, remortgaging can help you to finance those changes. If you have changed your strategy for renting out the property, for example, you are now targeting a different type of customer or renting for a different period of time, remortgaging can provide the funds to pay for these changes.

Changing who’s on the mortgage

There may come a time when the borrowers named on the mortgage need to be changed. This could be adding a new person or removing someone already named. Changing a joint mortgage to single, or a single mortgage to joint.

This basic process is called a transfer of equity, and a remortgage is the perfect opportunity to change who is on the mortgage.

Do you still need a holiday let mortgage?

If you’re wondering whether you still need a holiday let mortgage, it depends on how you’re using the property now.

A holiday let mortgage is a specific type of mortgage that is designed for properties that are used for short-term rentals, such as holiday rentals or rentals through platforms like Airbnb. These mortgages have specific criteria and clauses that are tailored to the business of holiday letting, and typically require the borrower to demonstrate that the property will be used for holiday letting and that there is a viable income stream from the rentals.

Additionally, these mortgages typically prohibit long-term rentals, such as on an Assured Shorthold Tenancy (AST) basis.

If you’re no longer using the property as a holiday let, but instead using it as a long-term rental or as your primary residence, you will no longer need a holiday let mortgage. In this case, you may be able to refinance to an alternative mortgage with better terms and rates.

The importance of remortgaging

When applying for a mortgage, most people choose an interest rate product that lasts a set number of years. For example, 2 years, 5 years etc.

At the end of the set term the interest rate will default to the lender’s standard variable rate, or similar tracker.

It’s very important that the loan is not allowed to roll over to the default rate, as it is rarely competitive.

We can conduct a review of your holiday rental mortgage, comparing what your current lender can offer, to options in the wider holiday let market. Invariably there are better deals to be found.

Finding the right lender

When you are remortgaging a holiday let, it’s important to work with a lender who understands the unique nature of holiday letting, and who offers mortgages specifically designed for this purpose.

Similarly, not every lender is comfortable lending against a mixed use property or a multi-unit holiday let

Some lenders may not be willing to remortgage a property that is being used as a holiday let, so it is important to shop around and find a lender who can provide the financing you need.

This is clearly a time consuming process. Why not let Drake Mortgages do all of this research for you?

Many of the specialist holiday let lenders don’t deal direct with borrowers, so the only way to access them is by using a broker.

Solutions for expats

If you are now an expat working abroad, but weren’t when you took your mortgage out, you may need to move lender.

Holiday let mortgages for expats are certainly available, but the pool of lenders will be reduced.

We can offer help if you own the property directly or if you need a Ltd Co holiday let mortgage.

Multi unit holiday let

Understanding the remortgage process

The remortgaging process works by replacing your current mortgage with a new one from a different lender.

When you remortgage, you’ll have to go through the same process as when you first got your mortgage, including applying for a new loan and providing documentation. However, there are some key differences between remortgaging a primary residence and a holiday let.

For example, when remortgaging a primary residence, lenders will typically focus on the borrower’s credit score and income. However, when remortgaging a holiday let, lenders will also look at the property’s occupancy and rental income, as well as any plans you have for the property in the future.

Remortgage and stay with your lender

When it comes to remortgaging, it’s worth considering all options, including staying with your current lender. If you’ve had a good experience with them, and your property has been a successful holiday let, they may be willing to offer you better terms on your mortgage.

A mortgage product transfer is a process where you switch your mortgage from one interest rate product to another, but you stay with the same lender. This is also known as a “product switch” or “product transfer.”

The process of doing a product transfer is typically simpler and less time-consuming than applying for a new mortgage. Your lender already has your financial information on file, so you won’t need to go through the same application process as you would if you were applying for a new mortgage.

It’s important to remember that there may be fees associated with a product transfer, such as a product fee, and it’s important to compare the costs and benefits before making a decision.

It’s always a good idea to consult with your mortgage broker to discuss your options and to determine if a product transfer is right for you, there may be better terms available by remortgaging.

How a broker can help

Remortgaging a holiday let can be a great way to take advantage of better rates or terms, or to free up equity in the property for other investments. However, the process can be complex and unique to holiday letting, which makes it important to work with a professional who understands the industry and has access to a variety of lenders that offer holiday let mortgages.

Using a mortgage broker, such as ourselves, who has experience with holiday let mortgages is the best route to take. We can help you navigate the process, find the best lender for your needs, and ensure that you have all the necessary documentation and information to make the process as smooth as possible.