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Holiday Let vs Buy-to-Let Mortgages: A Guide for Airbnb Hosts · Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights

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  This is the House Planet Mortgage podcast.
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  Our goal is to share everything you need to know about holiday
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  let mortgages and spotlight some of the leading products on the
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  market. In today's show, we'll be
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  outlining the key differences between buy to let and holiday
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  let products with Beth Taylor from House and Holiday Home
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  Mortgages. If you need any mortgage
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  support, get in touch with Beth and the team at Triple H
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  Mortgages today. They offer an unrivalled service
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  whether you're looking for your first holiday, let loan, a
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  remortgage or any other product such as residential buy to let
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  or HMO. To get in touch with the team,
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  call O1453887179 or e-mail Hello at hhhmortgages.com.
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  You can also visit the website for further details.
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  Hhhmortgages.com/host Dash Planet.
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  Welcome to the House Planet Mortgage podcast.
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  Today we're going to outline the key differences between buy to
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  let and holiday let mortgages. And with me to discuss this
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  topic is Beth Taylor from House and Holiday Home Mortgages.
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  How's it going, Beth? Hi, James.
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  Very well. Thank you.
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  How are you? I'm very good, thank you.
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  I'm excited about this. So key differences between
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  Bitele and holiday let products. So take it away with key
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  difference #1. Yeah, absolutely.
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  So as with just the whole mortgage industry, there's so
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  much nuance and there's so many different variables.
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  So of course, all of this comes with the caveat that it's worth
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  taking advice because you know, even kind of of of the sort of
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  the top five tips that I've got here, there's, there's going to
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  be sort of more, more variables, more details to go into.
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  But yeah, starting with the with the first one, it's that
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  there's, you know, when you're looking at comparing holiday let
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  mortgages to by to let mortgages, you do get a greater
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  number of lenders available who just do your sort of your
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  standard by to let. There are a smaller pool of
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  lenders who would do a holiday LED product, but there are
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  definitely plenty out there. So it's just about sort of
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  identifying who's going to be able to lend in that particular
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  area and you know, things like that.
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  So yeah, it's, it's more kind of a, a concentrated market to, to
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  start from essentially. Yeah, good point.
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  I mean, yeah, Bitelet obviously is a lot more popular.
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  Why is it that there are just a smaller number of holiday let
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  lenders? What's what's the reason for
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  that? Yeah, I guess where Bitelet has
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  been just a massive market over the past, you know, few decades,
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  whereas holiday let's have been more kind of few and far
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  between. So now that they are becoming
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  more popular and, you know, there's an argument to be made
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  as to that, that they could be more profitable potentially
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  we'll see more lenders actually go into that as and, you know,
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  flood to the market a little bit more, which which would be good
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  because, you know, if there's more availability, more supply
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  than demand, then you know, hopefully that'll bring rates
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  down. But but of course, yeah, just
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  traditionally people have sort of identified by to let that's
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  where I'll go and invest my money rather than going down the
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  holiday elect route is my opinion.
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  We're all for bringing rates down, so if we get more, more
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  players in the sector, that sounds like good news.
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  OK then. So key difference #2.
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  Yeah, key difference number 2. So with Bitelet properties, you,
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  I mean, I don't think I've come across a Bitelet mortgage
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  product that allows the owner to go and stay in the property at
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  any point. Whereas with holiday let's you
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  do have sort of a certain amount of personal usage, which is
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  really good, particularly if you are an expat and you want to
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  kind of come back into the UK, visit family, things like that.
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  And you want to kind of be able to get a bit of personal use out
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  of the property as as well. Whereas yeah, you're not going
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  to get that with a bachelor property.
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  And that's exactly why I bought a holiday let, because I was
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  living out in Qatar for 10 years and I knew with a bite to let
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  products that I can't kick the tenants out three or four times
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  a year. But with a holiday let, I can
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  block out exactly when I need to come back and use the property.
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  So yeah, you have that flexibility that you definitely
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  don't get with with other property investment.
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  Yeah, absolutely. And even if you're not an expat,
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  if you've got a lovely property down in Cornwall, up in the Lake
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  District or somewhere really beautiful, you're going to want
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  to use it yourself, aren't you, from time to time.
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  So yeah, that that's a definite benefit there.
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  Exactly. OK then, so key difference #3.
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  Yeah, I'm sure. So #3 so.
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  Oh, no. We touched briefly upon interest
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  rates and that's not kind of you know that that every breaker
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  will tell you that's not the be all and end all when it comes to
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  securing a mortgage product. But with holiday let products,
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  they do tend to carry a slightly higher interest rate.
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  Having said that, you might find that the lower interest rates
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  come with a bigger, a bigger product product fee or
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  arrangement fee. So it's not always all that
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  one's 3% versus that one's 5%. You know, you've got to think
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  about what other costs are involved.
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  And again, that's where an advisor will come in really
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  handy because they'll be able to make those comparisons and and
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  advise you accordingly. Yeah, the yeah, the holiday let
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  products unfortunately tend to be a little bit more expensive
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  than than buy to let products. But I, I guess this comes down
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  to holiday let being seen as a little bit more niche and I
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  guess from the lender's point of view, a slightly riskier
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  investment in inverted commerce. Because with buy to let you have
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  the tenants in, you know, you'd expect them to be in all the
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  time and paying the rent all the time.
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  Whereas holiday let's is a bit more variable.
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  Yeah, absolutely. You've got things like, you
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  know, maybe a greater risk of sort of void periods if you
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  know, if, if that's kind of a concern for the lender or there
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  might be sort of, you know, damage to the property, things
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  like that. So, so yeah, it does definitely
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  carry a greater risk. But as we said earlier, the the
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  potential uplift in income, you know, that that's, that's bound
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  to kind of be the case, isn't it?
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  If it's usually a higher risk, higher reward, it tends to be
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  the the case, doesn't it? Good way of looking at it.
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  OK then, so key difference #4. Yeah, sure.
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  So I think you might have touched upon this briefly in a
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  previous podcast with my colleague Joe, but it's around
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  the income assessment. So I know that, you know, with a
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  buy to let's mortgage income assessment that tends to be
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  looking at, you know, the monthly rent and kind of what
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  what sort of what income cover ratio the lender will be looking
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  at in respect of that virus. With a holiday let's
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  affordability assessment, 9 times out of 10, it will be an
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  average of the weekly income over the course of a low, medium
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  and high season income. Now there are some lenders who
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  would use a buy to let affordability assessment, you
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  know, for a holiday let's still. And so you have got a bit of a
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  bit of variation there if it benefits you to use that.
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  But yeah, and I turned out of 10 as I say, the the holiday let
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  income tends to be sort of the higher out of the two options
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  anyway. Yeah, definitely.
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  And usually when you're applying for a holiday let mortgage, the
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  lender wants you to provide something from an agency.
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  It might be like Sykes holiday because it's just for example
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  giving you a projection of what you're likely to earn.
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  And if they do base it on the buy to let revenue, that's
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  potentially not great because usually like you were saying
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  before the holiday, let income tends to be a lot higher than
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  what the the buy to let income. Yeah, absolutely.
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  And you know what you said there about kind of using a holiday
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  let agent such as Sykes to give you that estimation, That's
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  actually a really good thing. If you're looking to buy a
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  property, you know, as to use as a holiday let, you're going to
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  want to know for your own, you know, for your own purposes that
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  it's going to be worthwhile as an investment.
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  So yeah, that's a really good point.
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  It satisfies the lender's requirements, but also it's
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  going to be really good for you to have that information as
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  well. Yeah, definitely you you want to
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  make sure you're making a profit ideally in in this game.
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  OK then, Beth, So 5th and final key difference between buy to
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  let and holiday let products. Yeah, sure.
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  So #5 I mean, not really specific to to mortgage
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  applications, but I mean, it does definitely just definitely,
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  you know, it is something that that they will assess is all
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  about location. So obviously there are people
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  renting in almost every corner of the UK.
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  So you're going to, you know, you might not always have the
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  demand that gets you the highest rent, but you will quite often
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  have tenants looking in whatever area you're looking to have a
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  standard vital let's in with holiday let's you know, they're
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  not always going to be available for lending in every area of the
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  UK. So again, we spoke earlier about
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  sort of, you know, the the lovely parts of the UK like
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  Cornwall, the Lake District, the Cotswolds, things like that,
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  where you know that there's going to always be a really high
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  demand for tourism. And then you've got some of the
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  cities as well. So for instance, Bath, which is,
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  is near where I'm sort of faced, you know, you've got, there's
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  always different events on festivals, things like that.
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  It's a, it's a very romantic place to visit as well.
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  So you're always going to find that if you've got a holiday,
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  let them. The demand is usually going to
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  be quite high. Whereas I'm not going to kind of
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  name and shame any, any sort of less desirable places to visit,
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  of course. But you know that you might find
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  that there's less of a demand in other parts of the UK.
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  So that is going to really restrict you when it comes to
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  finding and buying the property, but it's also going to restrict
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  you on the lending on that property as well.
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  So the lender will want to see, you know, is this going to be
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  fireballs, a holiday lap? Is there an attraction nearby?
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  Is it a lovely city or lovely part of the countryside or coast
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  that that people will actually want to visit?
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  And therefore, is it going to make a sound investment there?
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  Yeah, the lenders looking to make sure that you're gonna make
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  some money from it and the the podcast about the 10 places
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  where you definitely shouldn't invest in the UK.
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  We'll save that one for a later date.
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  Well, we'll leave that one for now.
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  I don't know. OK.
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  Then Beth, so those great five key differences there.
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  So obviously there are more buy to let products out there than
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  holiday let products. You've got the advantage that
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  you can use the holiday let yourself.
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  You are going to pay a little bit of a higher rate usually
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  with a holiday let product than a buy to let.
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  The income assessment is a little bit different as we were
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  saying, because usually lenders will look at the low, medium and
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  high season and location is very important.
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  Finally, then Beth, so how's the market looking right now and
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  what are the best products available approximately for
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  holiday let mortgages right now? Yeah.
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  So it's been a bit of an interesting year this year.
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  Obviously, we've seen the base rate come down quite a bit.
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  We've seen swap rates kind of both go down and go up.
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  There was a a period sort of earlier on in the year where for
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  a number of consecutive weeks we did see fixed rates coming down
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  quite consistently. Whereas over the past month or
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  so they have sort of taken a turn in the opposite direction.
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  So I never like to kind of, you know, state interest rates just
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  because as I say, there's there's such, such a lot of
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  variables for the different kind of loan to value brackets and
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  the types of property and the different lenders available.
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  But yeah, always going to be as you'd expect to hear from an
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  advisor, take advice and that's how you're going to get the most
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  accurate sort of recommendations there.
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  Makes a lot of sense and if people want to get in touch with
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  you and the team at House and Holiday Home Mortgages, where do
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  they go? Yeah, I'm sure.
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  So yeah, just pop into Google House and holiday home mortgages
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  or Triple H mortgages. We're on Instagram and Facebook
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  as well. And then a few of us brokers
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  have got their own kind of individual social media pages as
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  well. So I'm on Instagram as at your
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  broker Beth, so you can find me on there.
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  And I try and do kind of a a few informative videos every week
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  and and you know, try and kind of help my help my followers
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  along better. But yeah, we're we're on we've
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  come out quite highly on on Google when you pop our name in
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  there or or search for holiday let mortgage is there.
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  Fantastic, and we'll put all those details in the show notes
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  along with your Instagram link. Beth, it's been a real pleasure.
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  Thanks for joining us on the Host Planet Mortgage podcast.
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  Yeah, it's been a pleasure being here.
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  Thanks very much for inviting me along.
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  All right, that's it for today's host Planet Mortgage podcast.
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  My thanks to Beth for joining us on this month's show.
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  To get in touch with Beth and the team at Triple H Mortgages,
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  call O1453887179 or e-mail hello at hhhmortgages.com.
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  You can also visit the website for further details.
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  hhhmortgages.com/host Dash Planet.
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  Until next time I'll be hosting.