Holiday Let Mortgage Advice

Significant interest in UK holiday let mortgages

Wednesday 31 August, 2022

Buying a holiday home or holiday let is an aspiration for many, and the mortgage on the investment is important to get right. Some plan to go on holiday there themselves and a significant number plan to live there permanently in the future. Others see a holiday let purely as an investment opportunity.  

The recent ‘staycation’ boom has driven up interest in UK holiday lets, particularly as the pandemic reintroduced people to the beauty of holidaying in the UK.  

In this article, Tracy Dove, Financial Adviser and Mortgage Broker in Exeter, Devon, analyses the UK holiday let market. She reviews the potential return on investment that can be achieved from a UK holiday let.

What do investors feel about the holiday let market?

Following recent research, conducted by Consumer Intelligence, where 1,470 UK adults were surveyed online, results show that sentiment among investors highlights the positivity towards the holiday let market.  

Statistics from the survey show:

  • Nearly one in ten (9%) people are seriously considering buying a holiday home let in the next five years
  • Over half (52%) of those surveyed who already own a UK holiday let property bought it in the last two years
  • Around two out of three (66%) would definitely, or possibly, move to their holiday let property permanently one day
  • The majority (84%) who own holiday lets said they made more income from them in 2021 than 2020
  • Almost a third (32%) said they would prefer to buy a holiday let property in the South West or London

What can the Return on Investment (ROI) be for a holiday let?

The ROI for a holiday let will have a number of determining factors influencing the outcome, with its location being one of the more important. If the holiday let is located in a beautiful, rural village or close to popular tourist destinations, the ROI will be higher than those located in less popular areas. 

For example, Exeter holiday lets have always proved to be a popular investment opportunity and the boom in staycations have continued to support its popularity. 

In some cases, during the height of the holiday season, a holiday let has the potential to make a similar figure in a week as could be expected in a month from buy-to-let. 

Holiday let investors have an opportunity to earn up to an 8% annual return compared to a buy-to-let investor aim for a return of around 6%. However, it is always worth noting that these returns can fluctuate due to external factors, so are in no way a guaranteed figure.

Holiday let mortgages

As with any property purchase, making sure you have the best mortgage product to match your financial circumstances is important. 

In the UK, it is standard practice that holiday let properties are not able to be purchased with a normal residential mortgage. Instead, you'll need to use a specialised holiday let mortgage which usually has different interest rates along with specific terms and conditions for the nature of the investment.

Here at Thomas Oliver, our team of expert financial advisers and mortgage brokers have access to a large number of mortgage lenders offering highly competitive mortgage rates. Our holiday let mortgage brokers welcome the opportunity to provide advice to our clients looking to invest in the staycation boom.

In summary

Holiday lets can offer a sound level of ROI if undertaken with the right amount of research coupled with the best holiday let mortgage product. It will be important to discuss your options with a professional financial adviser and mortgage broker before proceeding with a holiday let purchase. 

If you would like to discuss your holiday let mortgage options, please call Tracy Dove on 01707 872000, who will be on hand to guide you through the best mortgage product options available for your financial situation. 

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