Holiday let
No fuss, common-sense approach to lending.
Criteria for buying a holiday rental
Principality are one of the few lenders who consider holiday let applications across England and Wales.
If your client is looking to buy a property to use as a holiday home, there are a few things that need to be considered. Your client:
should be 21 years old or older
should have no more than 2 mortgaged holiday lets, whether in sole or joint names, including the current application.
can be a first time buyer or landlord
What you need to know
We offer a range of holiday let products for purchases and re-mortgages, whether your client is looking to purchase their first property to let or expanding their current portfolio. Please note: applicants can stay in the property for up to 2 months per annum.
- there is no minimum income requirement
- we consider Non-EEA applicants
- we consider non-regulated holiday mortgage applications on an advised basis
- we accept applications from applicants who do not currently own and live in their own home
- the maximum LTV for a holiday let mortgage is 75%
- the minimum property value and purchase price is £50,000
- the minimum loan size is £25,000
What are the loan to value limits?
| Loan to value | Minimum loan size | Maximum loan size |
|---|---|---|
| 60% | £25,000 | £1,000,000 |
| 75% | £25,000 | £750,000 |
How is affordability calculated?
We require rental coverage for different lending scenarios.
Scenario 1
Your client purchased their property before January 2017 as a holiday let. They would like to remortgage pound for pound.
Rental coverage we require: 125% at 8.25% as rental coverage
Scenario 2
Your client purchased their property after January 2017 as a holiday let. They would like to remortgage pound for pound.
Rental coverage we require: 145% at 8.25% as rental coverage
Rental income is calculated using an average of the projected low, mid and high season weekly rental yields.
This is usually multiplied by an assumed occupancy level of 30 weeks and divided by 12 months. This is then applied to the rental coverage calculation.
Typical example
John has a holiday home. His weekly rental changes depending on season:
High season: £700 per week
Mid season: £500 per week
Low season: £300 per week
Season average: £500 per week
His monthly rental is calculated as follows:
John’s average monthly rental is £500 x 30 (weeks) ÷ 12 (months) = £1,250
John’s rental coverage calculation (RCC) is £1,250 ÷ 1.45 = £862.07
RCC divided by current stress rate is £862.07 ÷ 0.0825 = £10,449.33
RCC multiplied by 12 months is £10,449.33 x 12 = £125,392
This means the maximum John could lend from us would be £125,392.
View our Holiday Let mortgages
Want to find out more, view our Holiday Let range.