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Commercial Mortgage for Holiday Let: Everything You Need to Know

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How to Apply for a Commercial Mortgage For Holiday Let


Commercial Mortgages

A business property loan, often referred to as a commercial mortgage, is secured against a non-residential property. This type of loan is commonly utilised for buying, refinancing, renovating, or developing business-related properties. Lenders typically offer terms spanning from 3 to 30 years.

Commercial Mortgage Types

Commercial investment mortgages are often used by those looking to invest in commercial property, such as a holiday let. Lenders usually provide up to 75% Loan to Value (LTV) for a commercial investment mortgage. For example, a landlord may need to refinance their buy to let property to stabilise their finances. They can approach a lender and secure a 10-year interest-only commercial investment mortgage, which ensures they can refinance their buy to let property.

Commercial Mortgage Requirements

To access commercial finance, borrowers will have to provide certain documentation such as their credit history, business accounts, or profit and loss accounts to the lender. This enables the lender to make an informed decision and assess the likelihood that the commercial mortgage will be repaid. Commercial lenders will use a non-residential property as security for the commercial mortgage. This is to ensure that the lender has a course of action in the event that the borrower cannot afford the commercial mortgage repayments. Unlike residential mortgages, which generally require a deposit of 10%, to secure commercial finance, the borrower will typically need a deposit of up to 25% to 30%.

How to Apply for a Commercial Mortgage for a Holiday Let?

If you require a commercial mortgage for a vacation rental, it’s recommended to reach out to an expert broker. As experts in property financing, we offer a comprehensive overview of the mortgage options available to you.

When applying for a commercial mortgage for a holiday let, you will need to provide certain documentation to the lender. This includes information on the property value, rental income, and your eligibility. You will also need to consider the type of mortgage you want, such as a repayment or interest-only mortgage. Additionally, you will need to consider the mortgage term, product fees, and interest rate. It is important to note that early repayment charges may apply if you decide to remortgage or repay the mortgage early.

In conclusion, a commercial mortgage for a holiday let is a loan secured on a non-residential property used for business purposes. To secure a commercial mortgage, borrowers will have to meet certain criteria, provide documentation, and pay a deposit of up to 25% to 30%. It is advisable to contact a professional broker to help you secure a commercial mortgage for a holiday let.

Frequently Asked Questions

What Type of Mortgage Do You Need for a Holiday Let Property?

If you’re interested in purchasing a holiday let property, you’ll need a holiday let mortgage. Unlike buy-to-let mortgages, which are designed for long-term rentals, holiday let mortgages are intended for shorter-term rentals of a week or less.

Are There Any Specific Lenders That Offer Holiday Let Mortgages?

Yes, there are specific lenders that offer holiday let mortgages. 

What Are the Eligibility Criteria for a Holiday Let Mortgage?

The eligibility criteria for a holiday let mortgage vary depending on the lender. However, most lenders will require you to have a good credit score, a suitable deposit, and sufficient income to cover the mortgage payments.

Can You Use a Limited Company to Purchase a Holiday Let Property?

Yes, you can use a limited company to purchase a holiday let property. This can be a tax-efficient way of owning a holiday let, as the rental income can be taxed at the lower corporation tax rate.

Do You Need a Commercial Mortgage for a Holiday Let or Can You Use a Residential Mortgage?

You’ll need a holiday let mortgage, which is a type of commercial mortgage, to purchase a holiday let property. You cannot use a residential mortgage for this purpose.

What Are the Key Differences Between a Holiday Let Mortgage and a Buy-to-Let Mortgage?

The key differences between a holiday let mortgage and a buy-to-let mortgage are the rental periods and the type of tenancy agreement. Buy-to-let properties are typically let for a minimum of six months, whereas holiday lets are let for much shorter periods, sometimes only one night. Additionally, holiday let mortgages usually require a larger deposit and have higher interest rates than buy-to-let mortgages.

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Legal Information & Disclaimer

This site is an information only site. All of our articles are written by authorised mortgage brokers for the only aim of providing great, useful, mortgage and loan related information. We intent to offer the best possible suggestions and guides however can’t always guarantee to be perfect, please use the information at your own risk. We can’t accept responsibility if things go wrong. Please contact us via our contact page if you see anything that requires changing and we will do so as soon as possible.

The articles on our site do not provide financial advice. Instead, they aim to equip you with the necessary information to attain your mortgage objectives. 

** The content provided in this page is correct at the time of writing. Mortgage and loan lender’s qualifying criteria and rules change frequently so speak to an adviser to confirm the most up to date rules and criteria. The content on the website is not specific advice to each reader, and does not constitute financial recommendations.