Holiday let mortgages – those for property on which you intend to earn a commercial rent through lettings – are typically difficult to come by. If you are an expat, they may be more difficult still.
Here, then are 5 tips and suggestions for helping you to succeed in your quest.
- Use a specialist broker
The more difficult it is to find a potential lender, the more useful you are likely to find the services of a specialist broker.
When it comes to holiday let mortgages for expats, this is likely to be still more relevant. The specialist broker is better equipped to understand the particular circumstances of the expat investor. Furthermore, an inside knowledge of the wider mortgage market enables such a broker to identify those lenders – perhaps those which are smaller and less well known through their presence in the market, for example – prepared to arrange such a mortgage advance to an expat.
- Choose your property
The purchase of a holiday let property is an essentially commercial decision – you are looking for a return on your investment through the receipt of rental income. As with any commercial investment, it is important to choose the asset carefully.
An article in the Telegraph newspaper on the 15th of November 2015, for instance, cited the particular difficulties in arranging mortgages for the purchase of purpose-built holiday let accommodation.
Unlike a property which you are buying to live in yourself as an owner occupier, any holiday let mortgage lender needs to weigh up the commercial viability of the property in deciding the affordability of the requested loan.
- Furnished holiday lets
Many different types of property might be suitable for holiday lets, of course. But if you offer furnished holiday lets, you stand to qualify for particular tax benefits – which may themselves be part and parcel of any mortgage lender’s assessment of the commercial viability of the loan.
Unlike other buy to let businesses, HM Revenue and Customs continue to allow tax relief on the interest you pay on a mortgage for the purchase of furnished holiday lets. There needs to be sufficient furniture to allow “normal accommodation” in the dwelling, for short-term lets of no longer than 31 days at a time, but with the business aim of letting the property for a minimum of 210 days a year (thus drawing a distinction between a commercially oriented holiday let and the purchase of a holiday home which you intend to use principally for your own use).
- Your eligibility as an expat
Different mortgage lenders may adopt different criteria when assessing your eligibility as an expat – where a holiday let mortgage might already be difficult to find, finding that loan as an expat might be more difficult still.
You may need to take into account the country in which you are living (ensuring that it is not subject to any economic sanctions, for instance), that you are employed by an internationally recognised employer, are in receipt of a private pension from the UK, or are able to furnish at least three years of audited accounts if you own your own business or are self-employed.
- The location of the holiday let
Clearly, any mortgage lender needs to take into account the location of any property in which you intend to invest. If you are to qualify for the tax benefits of owning a furnished holiday let, for instance, the property needs to be in either the UK or the European Union.