Taking a mortgage on a holiday home is a fairly sizable commitment but can often be the best route to acquiring a holiday property. There are, of course, a number of factors which will affect this, least of all affordability in today’s climate. This section will explore some of the issues surrounding taking a second mortgage or, more accurately, a mortgage on a property which is not your main residence.

Why take a second home mortgage?

Paying monthly amounts, either fixed and following a variable base rate, is a sound long term plan to acquiring a holiday home which becomes a valuable asset and can be used at your own discretion. Depending on the amount borrowed and rate of interest charged on the loan, the annual cost may be not much more than that spent in a year on holiday accommodation, depending on how often and whom the holiday home will be used.

Affordability

In the same way that finances are planned for a main home purchase, a holiday home purchase should be considered, addressing some of the following questions:

• Are the monthly repayments affordable, and are they affordable if interest rates rise?
• What other running costs will I occur?
• Over how many years will the mortgage run?
• What type of mortgage is best for me?
• What deposit will I require?

Mortgage availability

A key criteria for second home mortgages will be affordability, especially in the current climate of limited funds available from lenders, tightening lending criteria and uncertainty around the economy and job security. It may be worth speaking to brokers or mortgage lenders as part of the actions in our establishing goals section and initiating the search for a holiday home

Mortgage availability can also be influenced by the earning potential of the property as a holiday let, which can help with the business plan. However if the property is to be used privately, you will need to show affordability within your own income and outgoings.