Holiday let mortgages have been around for a very long time. However, in recent years this type of mortgage seems to have skyrocketed. This type of mortgage was created for rented properties, typically on a short-term basis and, most importantly, during a specific time of the year, like the winter holidays. The self employed mortgages are similar to the regular ones, but instead of showing proof of job stability, you show evidence of being self-employed.
The main difference between these two mortgages is that the holiday ones are created for houses that will generate the owner money, like rental properties, and the other, the self employed mortgages, are virtually like the regular mortgages but with different paperwork. The self employed mortgage is also a much harder mortgage to obtain.
How to Get Approved for Self Employed Mortgages
Many people think the application, process, and approval for self employed mortgages are pretty exhausting. Getting approved for one of these mortgages is not that hard. But it’s still more challenging to obtain than the regular mortgage. The main question is, how can you even get a mortgage if you are self employed? Whether you own a company or at least a 25% share of a company, you should know this type of mortgage is another option.
The criteria are pretty simple. You need to own at least 25% of a business. You need to show the lender proof of at least two years that you’ve been self employed, and you need to remember lenders only consider taxable income. Other than that, you should probably hire a mortgage advisor who knows all the bits and bobs and is capable of explaining every step to you in great detail.
How to Market a Holiday Home?
First, you should understand that marketing a holiday home is an entirely different process than marketing the standard buy-to-let. The buy-to-let, to some extent, is quite an easy process. But, on the other hand, holiday let mortgages are much more challenging. So now the reality is that if you’re thinking about getting into the holiday let sector for the first time, you should not walk in all naively, thinking you need to buy a property and get a mortgage, and that’s it.
The advice would be to make a plan. Think about your targeted audience. Thinking of a plan is essentially the most challenging thing for you to do, as many people fail this plan by saying they want to appeal to everybody. By doing so, you have a risk of appealing to nobody. The entire decision-making process is based on this small question. Who do you want as your tenant? The influencers? The families? Only adults? If you think about it, it might sound crazy, but answering this question can help you create that perfect environment for the tenants.
By choosing that perfect tenant, you envision their stay. You know what they would like to eat, what type of room they would like to stay in, what amenities they would appreciate, and so on. And the reality is that so many people fail at this business because they can’t create that picture in their heads. They don’t know what their targeted audience is. Knowing your audience helps you better understand and lay out your business for a higher profit.
Why Are Holiday Let Mortgages Important?
You should know about holiday let mortgages because they have many advantages. The point of holiday let mortgages is that you can borrow money the same way you would a buy-to-let. However, you will need a deposit of 25% to get one of these. That means you will be looking at a mortgage of 75% loan to value.
As a general example, say you have a house worth two hundred thousand pounds. When you have a holiday let, for seven weeks in the summer, at the peak of the season, you can make about 1 thousand pounds a week for the same house worth two hundred thousand pounds. However, in the winter months, you will not be going to earn so much. But then, there is the off-peak period. When this off-peak period happens, the same house can be rented for close to 5 hundred pounds per week. And that’s only if you can rent it. So this is seen by the lenders as running a business.
The holiday let mortgages prove to be a way to earn some extra money for some landlords. It was speculated in recent news that the average holiday let owner was making close to 21 thousand pounds per year. Of course, you could get lucky, and with a great house, people might just come in, and you might make lots of money out of this. However, this kind of business works better over time. It would be best if you kept in mind that the holiday let is a competitive sector already. Nowadays, many people are trying to appeal to the same audience.
Why Are Self Employed Mortgages Harder to Get?
No matter how successful your business is, a business owner always has it worse than the general public. Especially if you’re starting on the path of self employment, this will only become harder due to external factors like inflation or price spiking. But however hard it may get, it will never be impossible to achieve. And with an excellent mortgage broker next to you, this process can be as easy as 1-2-3.
The reason many people fail when it comes to getting self employed mortgages is pretty simple. When you are a regular employee working for someone else, you get a monthly salary that usually comes in the same amount. A lender sees that and considers you eligible because your salary proves that you are paid monthly and can afford their loan. However, when you seek self employed mortgages, you need to provide the lender with security. The fact that you are self employed means the lender takes a considerable risk trusting that you will get a stable constant income.