Second Home/UK Holiday Home mortgages
Second home / Holiday home (not for let) mortgages are designed for anyone looking to buy a second residential property which could include a second residence to be closer to work, a home for a family member to live in or perhaps a holiday home for personal use (these properties must not be used for business purposes or rented). With this in mind, we’ve got access to a specific range of products to meet your needs in a number of ways.
Holiday let mortgage?
A holiday let mortgage is designed for people looking to borrow money to buy a property that will be let out on a short-term basis to tourists as a business.
It differs from a holiday home mortgage, where you borrow money to buy a second home that only you will use.
It is also different from a buy-to-let mortgage, where you borrow money to buy a property that will be let-out on a long-term basis.
Holiday let mortgages are available for:
- purchases and re-mortgages of holiday let properties up to a maximum loan to value of 75%, including new build flats
- purchases of second homes with limited holiday letting use to 85% LTV
- limited company holiday let (trading company or SPV)
- first time buyer loans available
- max loan size (subjects to limits above) assessed on rental income or a combination of rental and personal income
- non-traditional construction available. Minimum value £150,000
- properties in Scotland
- Up to £1.5m at 75% LTV, low rates
- multiple self-contained holiday lets on a single title
- mixed use/multiple unit holiday lets, where the owner is resident
- holiday let development/conversion and bridging finance
- capital raising on a first or second charge basis available
- purchase and refinance of holiday let businesses
What is an 'overseas' mortgage?
An overseas mortgage is a mortgage for a property that's not in the UK. You might want to consider taking out an overseas mortgage if you're buying a holiday home, retiring to sunnier climes or - an increasing trend - buying your first property overseas because you can't afford to buy in the UK. You can arrange an overseas mortgage through a UK bank or an international lender. It's also common to raise the funds to buy a home abroad outright by remortgaging your UK property. Here, we explain the pros and cons of each option.
Remortgaging your UK home to buy an overseas property
Remortgaging your UK home can help you raise the funds to buy an overseas property outright. Whether this is a sensible option for you will depend on your personal circumstances - including how much of your existing mortgage you've paid off and your current credit rating - as well as factors such as interest rates at the time you apply. Find out more: remortgaging to release equity from your home
Borrowing from a UK bank to buy overseas property
Some of the main UK high street banks have an international mortgage service, but you'll need to find out which countries they operate in. Banks tend to only provide mortgages for purchases in countries where they have offices. While getting a mortgage in established overseas property markets such as France or Spain might be simple, it may be trickier if you're looking further afield. Although the mortgage may be set up through the UK bank, you would deal with the foreign arm of the bank once the mortgage had been arranged.
Arranging an overseas mortgage abroad
It's possible to arrange a mortgage with an overseas lender using a specialist broker. These brokers can give you tailored information, including a list of estate agents or lawyers to use in your chosen country. Mortgage rates in some areas of the eurozone are far lower than in the UK, especially in established property markets with a wide range of mortgage providers, so you might get a better deal by borrowing abroad. However, overseas mortgage brokers are not covered by the Financial Conduct Authority, so you would struggle to get any compensation if you were given poor advice. You should also consider the repercussions of borrowing in a foreign currency. If you do so, exchange rate fluctuations will affect your repayments.
Deposits on overseas property
The deposit needed for an overseas mortgage tends to be higher than you'd need for a standard UK mortgage. In Spain, it's common for overseas buyers to pay 30%-40% of the property price as a deposit. In some countries the deposit is non-refundable, so don't hand over any money before you've negotiated an initial contract, and then only to a lawyer or bonded estate agent.