Buy-To-Let Holiday Cottage

SimonCull

Hi everyone,
The wife and I are in the lucky position to consider buying a holiday cottage. We currently rent out a house (£150k / £500pcm) and are looking into the possibility of selling the rental property in favour of a holiday let. At current estimation (80% occupancy over the year and 20% management fees), we stand to make around £4000pa more than the rental property. In order to get the property we're looking at, we'd need a mortgage (£125k). We've never had a mortgage (my wife lost her parents and grandparents very young so we inherited our house) so I have a couple of questions/assumptions to make sure I'm not misunderstanding anything:

1) I am assuming I can port the BtL mortgage after the fixed rate period.
2) If we manage the income properly I am also assuming when we port the mortgage we can then use some of the profits to reduce the mortgage amount - i.e. buy off some of the property from the lender.

Thanks for any help and advice!
Simon

cahillg81

Does the lender you are with offer loans on holiday lets? Many don't. So unlikely you can port the mortgage to a holiday let. Those who do allow holiday lets also have specific products.

SimonCull

As per the original post, we don't currently have a mortgage. I was wondering if we GOT a mortgage on the holiday let would we be able to port it.

cahillg81

Do you understand what porting is? I think you may have cross wires.

tlc678910

Hi, so as already mentioned you need to go to a broker to see if you can get a mortgage specifically for holiday letting.

If you go for a fixed rate mortgage product when the fix expires you can look for a new fixed rate mortgage product if you like. You apply for this subject to the lenders terms and conditions like your initial mortgage or your original lender might have another product that you can ask to switch to.

You could also choose a mortgage product that tracks the Bank of England base rate - the broker will show you your options.

Porting your mortgage means taking your mortgage rate with you when you sell the holiday letting property and buy another. Lenders that allow this still check that you and the property meet their lending criteria when you apply to port. If you intend to sell up and buy again during a products term e.g. during a five year fix, then that is when you should ask the lender if they allow 'porting".

Hope that helps (clear as mud?)
Tlc

I don't know about holiday letting mortgages but usually residential mortgages let you overpay up to 10% a year without penalty and unlimited when the fix term expires. Ask the broker about this too.