Holiday cottage mortgage

Ian_W

MarkyMarkD wrote:.. and IanW has posted that BTL lenders won't lend on holiday property because they want to see a shorthold assured tenancy in place.

Marky - the ones I've checked with won't. Didn't mean ALL BTL's - but I have checked quite a few and AST's etc seem to be required, ie: they cater for normal landlord/tennent situation, not holiday lets.
Which is why I asked THE VERY VERY NICE & HELPFUL BROKERS who lurk on these pages if they were aware of any types of loan which may be appropriate for a holiday let type purchase or whether it was only possible by a remort on principal residence.

MarkyMarkD

Ok Ian. Thinking about it, my boss has got a holiday cottage (which he lets out on short-term holiday lets) and I'm pretty sure that he's got some sort of mortgage on that. I will consult him at work on Monday to see who it's with. From what I recall talking to him about it, it is a normal BTL mortgage.

Ian_W

Cheers Marky. :T

And if xma5 happens to check back, perhaps you can let me have details of the 4.3 offer when you get them. You can PM me if you don't want to post them.

xma5

Ian

what other details do you need ?i think the mortgage is a cammercial one not a normal btl.

can you recommend and good brokers ?

Ian_W

Name of the lender, fees attached to the mortgage, broker fees, name/contact details of broker. If it's commercial it's a damn good rate, I thought they were usually more exe that domestic mortgages and was just exploring it as an option instead of a remort.

Not as far down the line as you I suspect. We know the area we want to buy, Looe, but don't have a specific property lined up and won't be going down there until October [hopefully quieter, fewer buyers, more realistic sellers ] - which is why I didn't post myself but when I saw yours it was so similar I thought I might as well tag along for the ride.

I'm going to post on the Tax thread later because I'm thinking I'm missing a trick here - you may have thought of it - but here goes. I've 100k in bank, property we want is c150k, mort outstand on home 60k. I was intending to remort/ borrow on prop 2 a further 60k, leaving 10k for legals etc & yr1 running costs. What struck me last night thinking about it was - pay off 60k residential mort, borrow/remort 120k + 30 k cash. All the 120k then is to purchase cottage and ALL the interest is deductable as a tax expense instead of only 60k's worth. Any tax losses on furnished holiday lets [unlike BTL's] can be offset against other tax liabilities.
Does that make sense to you?

MarkyMarkD

Ian

That is the way I would do it. Indeed, it's the way I already HAVE done it. (BTL not holiday let, but same principles).

I did ask my boss who he had his holiday let mortgage from, and how (given that I'd heard it was hard to get mortgages for holiday cottages to let out) and he said "I lied to them and pretended it was a standard BTL". D'oh! So no help from him. He agreed that it was very, very hard to get a legit mortgage for a holiday cottage and that's why he'd gone down the route which, of course, I wouldn't recommend.

Bear in mind (although this is obvious, I should just point it out) that by borrowing more money on your principal residence for any investment, you are increasing (however marginally) the risk of your home being repossessed if anything goes wrong with the investment.

Also, if you occupy the furnished holiday let yourself, you would not be able to offset the interest for that proportion of the time. And if you always occupied it in the nice summer months, and then let it in the winter months (probably at a loss), that wouldn't go down too well with the Inland Revenue either.

Ian_W

MarkyMarkD wrote: Also, if you occupy the furnished holiday let yourself, you would not be able to offset the interest for that proportion of the time. And if you always occupied it in the nice summer months, and then let it in the winter months (probably at a loss), that wouldn't go down too well with the Inland Revenue either.

We wouldn't be going down that route on the short/med term. It would be available for letting at popular times, if for no other other reason than to pay for itself, we would use it at quieter times, which suits us fine. Longer term the intent would be to retire to it - then stop letting. We are quite used to proportionalising running costs against personal use from our overseas property which was a FHL.

Many, many thanks for the trouble you've gone to. Given we have both equity & income, there is no point going down the route your boss did when, as you rightly pointed out earlier, BTL are usually more exe than domestic fixed/variables.

I'll let you know if/when we do buy. Thanks again. :beer: