How do I get a mortgage on a holiday home?

Owning a second home on the coast or in the countryside is something many people dream of.

Having your own personal bolthole that you can use to escape the rat race, or enjoy with family and friends, sounds amazing.

However, if you’re looking to buy a holiday home in the UK, you’ll probably need a mortgage to make your dream a reality. The type of mortgage you need will depend on what you intend to use your holiday home for.

If you plan to let it out to tourists or holidaymakers on a short-term basis, then you’ll need a holiday let mortgage. These are designed for people wanting to borrow money to buy a property they plan to let out – check out our guide to holiday let mortgages for more information.

If you plan to purchase a holiday property intended only for personal use, then you’ll need a holiday home mortgage, which is the focus of this blog. Read on to find out more…

What is a holiday home mortgage?

A holiday home mortgage – also known as a second home mortgage – is similar to the mortgage you would take out to buy your primary residence.

However, the main difference between a standard mortgage and a second home mortgage is that most providers apply stricter lending criteria, as they’ll need to be sure you can afford the repayments on both mortgages. You’ll also likely require a deposit of anywhere between 15% and 25% of the property’s value to secure a second home mortgage.

And if you’re buying a property to use as a holiday home instead of a furnished holiday let, there will be limitations on how the property can be used. You could face legal and financial penalties if you fail to meet them.

How do I get a holiday home mortgage?

As we mentioned above, if you’re looking to take out a holiday home mortgage but have outstanding repayments on your main home’s mortgage, your lender will likely impose stricter rules on the application.

You’ll need to go through all the same financial checks as you would for a standard mortgage, but the lender will be more cautious about lending to you, as it will be more expensive for you to repay two mortgages every month.

It’s a good idea to check your credit score before taking out a second home mortgage. Missed payments or additional debts taken on since you took out your first mortgage can affect your credit score and reduce your chances of being approved for a holiday home mortgage.

Most mortgage providers are more likely to lend to you if they have some kind of security in case you can’t make the repayments. While securing a second charge mortgage against your current home is an option, it’s not without risk. The lender could seize your home if you can’t keep up with the repayments on your second property.

This is why you should always seek advice from a mortgage professional experienced in the holiday home market to help you get the best deal and explain all the implications and obligations that come with it.

You’ll also need to work out what type of mortgage you need, as several types are available. This guide can help you decide on the right holiday home mortgage for your needs.

The main thing to consider here is whether a fixed-rate mortgage will work out cheaper in the long run, or if you can afford the risk of taking out a variable-rate mortgage.

It’s also important to note that you’ll face the same additional costs as buying a house, including legal and mortgage arrangement fees and Stamp Duty if it’s applicable.

Paying off more of your current mortgage may also help, as if there is less debt to repay, it may make a second home mortgage more affordable, and you may even be able to negotiate a better deal. Again, an experienced holiday home mortgage broker will be able to talk you through your options and help you find the right mortgage for your needs and circumstances.

At House & Holiday Home Mortgages, our expert team has over 40 years of experience in the holiday home market. We’re dedicated to taking the stress away from getting the right mortgage. We’ll provide honest, straightforward advice and guidance on the right way forward and help you arrange the deal that’s right for you to make your investment a holiday home as pain-free as possible. For more information, get in touch today.