How to finance your holiday home

Many people look forward to the idea of retiring somewhere by the sea or in the countryside. They may perhaps have many happy memories of holidays spent in such locations.

One way of planning in advance for this type of future and to turn it into a reality may be to buy a holiday home and then retire to it as and when the time comes.

A common misconception is that purchasing a holiday let property with a mortgage is the same as for a buy to let or residential property for your main residence.

Financing a holiday home that is to be let out is very much a niche sector and many mortgage lenders choose not to be a part of it.

Nevertheless, there are lenders that are willing to help and we have been successfully assisting our clients to purchase their future retirement homes since 2006.

Before we start to provide solution for clients we need to understand what your plans are for the property.

• are you going to use the property exclusively for your own holidays or do you plan to let it to others as a way of generating some additional income
• how are you anticipating financing your purchase?

Obviously finance is generally the most important aspect of buying a second home.

The fact that you are considering a purchase in the first place indicates that you believe you have the financial means to service a mortgage on the property.

There are a number of ways of achieving this including:

• having sufficient income (both personal and potential rental) to support the mortgage repayments
• using other assets that you may have as security – this might perhaps include equity you may have in your own home, shareholdings and the like

It may only be by looking at your financial position in its entirety and taking due consideration of the type of property that you are interested in, that we can determine which is the most appropriate way for you to proceed with your holiday home purchase and make contact with the most appropriate lenders for your particular situation.

If you are planning to let your property out as a holiday home, then you may wish to note that a standard buy to let mortgage will not be suitable. In fact, if you intend to carry out renovation work prior to letting out, you may need to opt for a commercial loan and then convert that to a mortgage once your paying guests are able to move in.

Of course, if you already have a holiday home mortgage and are looking for a re-mortgage to free up some cash to carry out some renovation work or perhaps just to reduce monthly expenditure, then this is also something that we may certainly be able to help you with.

Author: Mark Lanario