The High Street banks have yet to fully commit to the holiday let market and consequently the lenders you need are less well known and harder to find!
But the lenders that are involved do understand holiday lets and how they work and want to lend to you. They offer a more individual service and are happy to look at the borrowers personal situation rather than squeezing you into immovable mortgage criteria.
So who are the best holiday let mortgage lenders?
The lenders are a varied bunch and many do not advertise their holiday let mortgage products, preferring to receive their holiday let business via brokers such as ourselves.
In your search for a suitable mortgage you may come across some of the larger lenders such as: Nationwide, Santander, Metro Bank, Barclays and HSBC. Confusingly they do not offer a ‘true holiday let mortgage’. Most are either buy to let mortgages or holiday home mortgages that allow a small degree of commercial letting.
There’s a list of over 20 mortgage lenders that cover UK holiday lets.
Here are the current leaders of the pack.
Bath Building Society
Tend to charge higher rates. However they can be useful with some complicated scenarios.
Cumberland Building Society
A specialist lender, dealing in the hospitality market. Simple lending to the very complex. Have to be approached in the right way, as the perceived quality of the applicant is critical.
Furness Building Society
Will lend in Scotland. 75% LTV often available on paper, however affordability can be an issue, as the property income cover ratio is not considered in isolation.
Hodge Bank for Intermediaries
An established UK lender who is a fairly new entrant to the holiday letting market. Hodge will accept first time buyers, but the property underwriting can be very convoluted.
Ipswich Building Society
Well known for offering a market leading 80% loan to value (LTV) holiday let mortgage. However most FHL cases do not pass the rental cover ratio. Very strict on acceptable property types and only lend within a locally defined area.
Leeds Building Society
Can sometimes have higher LTVs and rates advertised, but only use a limited amount of seasonal rent to determine the loan size, which can be an issue.
The Melton Building Society
A very helpful building society who has quite strict holiday let lending criteria. If you need speed they are probably not the best choice.
This challenger bank often shows up when searching for holiday let loans. However, they do not have a true product. It is essentially a residential mortgage that will allow you to purchase a holiday home or second home. This property can be let out (including Airbnb) but only for a maximum of 90 days per year.
Monmouthshire Building Society
If you know your way around their underwriting, a great lender. 75% LTV often available and their use of rental often makes the loan size possible. However, they have structured personal underwriting criteria and are strict on acceptable property types.
Principality Building Society
One of the earliest into the holiday let lending market. Usually offer some good rates, and will accept certain types of non-traditional construction. Strict lending criteria and again loan can be curtailed by their more limited use of rental income.
Teachers Building Society
Teachers are small and are often out of the market for long periods of the year. When they are in the market they can be useful with complex cases that don’t fit the standard lenders criteria.
So where should you start?
All mortgage brokers will say that you need to see a mortgage broker before applying for a new mortgage!
They are essentially right, you will receive useful independent advice from the whole of the market, but if your case is quite simple and straightforward you could just do it yourself.
But how would you know that?
Mortgage advisors can be invaluable when your situation or circumstances are just off the ‘norm’ or are non-standard.
- Complex sources of income
- Multi-unit properties
- Unusual properties
- Cross collateralisation of assets
- First time landlord
- Properties in Scotland
There are so many mortgage lenders out there waiting for your business but how do you get to them? They don’t advertise and they don’t deal direct.
Call an Independent Mortgage Broker (like us).
These brokers will have access to the whole mortgage market including these specialist lenders.
But more than that they will know which ones want you!
Our brokers are in constant touch with lenders of all sizes and receive daily updates on new products and changes. So they will know just the lender you need.
Can you go direct?
Yes and no.
There are some holiday let lenders that will deal direct.
However, that does not mean it’s all plain sailing. Holiday lets are complicated and the lenders are picky. If your application is turned down that’s money and time wasted.
Not all lenders accept mortgage applications direct from the borrower. Many prefer an intermediary or broker to be involved and for them to have assessed the case first.
How to get the best holiday let mortgage
The only way to be sure that you have the best mortgage for your circumstances at the best interest rate is to get advice from an experienced holiday let mortgage broker.
It will be their responsibility to search the holiday let market, look through the different options to find the best mortgage that suits you and your needs.
You will have a far greater choice of lenders and products than going direct.