There are an increasing number of lenders who are now prepared to assist with a holiday let mortgage. These mortgages differ from ordinary residential loans in that the amount you can borrow is typically based on the lettings potential of the individual property. Important therefore that you have a good knowledge of the area you are hoping to purchase in and get a view from a local holiday lettings agent as to the lettings potential. You ordinarily will need a minimum 15% deposit which could be obtained through releasing equity in your residential property or through savings.
Lenders tend to view holiday let mortgages as a commercial proposition a fact that is reflected in the slightly higher rate of interest that they will charge as opposed to a standard Buy to Let mortgage.
Each of the holiday let lenders we deal with have slightly different lending criteria and we would make a recommendation of the most suitable lender once we have had the opportunity to review your circumstances with you.
The Inland Revenue treat furnished holiday homes as a business asset and as such generous tax breaks are available. For example, if after deduction of mortgage interest a furnished holiday home incurs a loss it is possible to offset that loss against personal taxation paid in previous years.
To qualify as a holiday let the Revenue have certain stipulations which must be met :
- The property must be available to let for at least 140 days per year
- The property has to bet let for at least 70 days per year
- The property cannot be occupied by the same person for more than 31 days in a 7 month period.
For further information about taxation and the benefits of owning a holiday home we would recommend that you always contact an Accountant.