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Buy to Let

Leeds launches mortgage for holiday homes

paulajohn
Written By:
paulajohn
Posted:
Updated:
24/07/2013

Leeds Building Society has launched a

As long as borrowers meet the minimum rent requirement, they may also use the property for vacations themselves.

Leeds Building Society sales and marketing director Kim Rebecchi said:

“Holiday let provides an appealing alternative to buy-to-let, with attractive rental returns and a second home rolled in to one.

“We estimate that up to two thirds of existing holiday let landlords would refinance their current deal in order to reduce their costs and maximise their income, but choice is limited.”

The mutual does not expect borrowers to rent the property out 52 weeks per year, and there is no limit on the number of weeks they may spend on holiday there. However, borrowers must show an average rental income which is 130% of the mortgage repayments over the year as a whole.

At £40,000 per year, holiday let borrowers must have double the rental income of buy-to-let borrowers and may borrow at the lower ratio of 70% loan-to-value.

The minimum property value is £75,000 compared to £25,000 for buy-to-let properties and the maximum number of properties allowed in a holiday let portfolio is three.

Holiday let firm Hoseasons Group business development director Drew Dunn said they received on average 75 enquiries per week from individuals looking to enter the holiday let market:

“We believe that this type of mortgage product will most certainly help fulfil a demand in the current market and provide awareness in what is sometimes an overlooked segment when compared to other mortgage products.”

The mortgages, which are available as two, three and five-year fixed rate products, allow a 10% capital repayment each year without penalty and tapered early repayment charges. All products have a £199 booking fee.


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