Smaller lenders offering impressively low holiday let mortgage rates

by Aaron Strutt

Jun 23 2019

Trinity Financial has access to a range of banks and building societies offering impressively low holiday let mortgage rates.

With demand for traditional buy-to-let mortgages slowing down and many people choosing to stay in the UK for their holidays, short let properties are increasingly providing excellent rental returns.

According to a recent report by Second Estates, the cost of a week’s stay in a UK holiday let has risen to £1,200. While the property firm also says prices increased by 14.5% in Cornwall where the average weekly rent is £1,740.

Aaron Strutt, product director at Trinity Financial, says: “Some of the lenders offering holiday let mortgages charge borrowers the same competitive rates as buy-to-let investors.

“Many of the big banks and building societies are still not offering holiday let mortgages, so the smaller providers have stepped into increase their lending volumes.”

Here is a selection of some of the lenders offering competitive holiday let terms:

Leeds Building Society is offering some low rates, and it will even take your personal income to increase the maximum loan size if the property does not generate enough rent.

The society will accept landlords with a maximum portfolio of three properties, and it has a minimum income requirement of £40,000 to qualify.

The property investment/holiday let must not be the applicant's primary source of income, while the maximum loan is £500,000 at 70% loan-to-value.

Leeds uses a rental income calculation of 140% of the interest payable on a stress rate of 5.5% for purchases and capital raising remortgages, and it reduces to 5% for like for like remortgages.

If a property generates £3,000 each month, the building society would potentially lend you £467,000 if you are purchasing a property, while this would increase to £500,000 if you are remortgaging without capital raising. 

Impressively, the lender is also happy for borrowers buying a holiday home to stay in it from time to time. 

Principality Building Society provides the same rates for its buy-to-let and holiday let mortgages. It has a maximum loan of £500,000, and requires a minimum 25% deposit to qualify.

There is a minimum income of £20,000 for sole applicants and £30,000 for joint applicants. For holiday let mortgages over £250,000, the income requirement increases to £80,000 for single or joint applicants.

The lender will ask for local letting agency to confirm the weekly letting rates and the use a rental stress test of 145% at 5.5. If a property generates £3,000 each month, the maximum loan size would be approximately £450,000.

It also states properties cannot be on a holiday park and the mortgage must be repaid on or before the applicants 76^th birthday. 

Axis Bank has some specific criteria requiring as least one applicant to have at least three existing buy-to-let properties, and subsequent applicants to hold at least one existing buy-to-let property, which they must never have lived in.

All applicants must have been active within the buy-to-let market for the past two years.

You can potentially have a maximum of five mortgages with Axis Bank, and there is no cap on the size of the portfolio they can have with other lenders.

Holiday let mortgages are available up to £500,000 if you have a 25% deposit, or £1 million if you have a 35% deposit.

Call Trinity Financial on 020 7016 0790 to secure a holiday let mortgage.