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self employed mortgages

More and more people decide to spend their holidays in UK; there is a growing demand for vacation properties and this means that purchasing holiday homes and renting them out is worth considering. Holiday let mortgages are a great option for those who want to rent their properties and make some extra money and they work similarly to but-to-let ones.

Self employed mortgages, as the name suggests, are designed for individuals who are self-employed. These are more difficult to obtain but not impossible.

Why Invest in Holiday Let Mortgages?

If you would like to purchase a vacation home and rent it out on a short-term basis to holidaymakers, holiday let mortgages are a great choice. Individuals who intend to rent out the property to holiday tenants do not qualify for buy-to-let mortgages.

Holiday let loans are a wonderful choice; the overall cost is influenced by the total cost of the property, the size of the deposit, and the interest rate. Holiday lets are quite similar to buy-to-lets and to apply for such a loan you have to:

  • Save money for the deposit
  • Shop around for the most suitable loans
  • Make sure you meet the criteria of the lender
  • Request a mortgage offer

How to Apply for Self Employed Mortgages?

According to an interesting article in The Times, "Being self-

employed isn’t a barrier to being accepted for a mortgage, but you might find there are more hoops to jump through.

Self-employed borrowers are generally viewed as riskier because there is no one employer to vouch for their salary.

As a result, providers require more information to prove the borrower has the “right track record”, says David Hollingworth at broker L&C Mortgages. "

To qualify for self employed mortgages, most lenders will ask to see your accounts for a period of at least two years to see whether you are a suitable candidate or not. You will also have to provide your bank statements so that lenders can see the profit you make. If you have contracts that can show how much money you are expected to earn in the future, you can show them as well.

The amount of money you can borrow via such a loan is influenced by the amount of money you make and the affordability criteria of the lender.

Can you Qualify for a Mortgage If You Are Self-Employed?

Self-employed individuals can receive loans but the entire process is a bit more complicated for them. They will have to provide lenders with a copy of the SA302 form or a tax year overview from HMRC. If you are determined to apply for self-employed mortgages, you should request the forms in advance because it can take a few weeks for them to arrive.

Also, the lender will require you to provide the national insurance number and the self-assessment unique taxpayer reference. Lenders need to see proof of current and previous earnings, and they have to see proof of future income as well. The more evidence you can provide, the easier it will be for you to obtain the loan.

Other aspects that are of interest to the lender are your spending habits; how much do you spend each month compared to what you earn. You will be inquired about household bills, commuting costs, credit card repayments, childcare or other expenses you might have.

What Are the Criteria for Holiday-Lets?

Individuals who look forward to obtaining holiday let mortgages should first make sure they meet the necessary criteria. These are:

  • The property must be available for minimum of 210 days each year
  • The property must be rented for at least 105 days each year
  • The renting period should not exceed 31 days
  • Staying that is longer than 31 days is not included in the total number of days/
  • You have to be the owner of a property
  • You can afford at least a 25% deposit
  • The holiday home you purchase cannot be used as your main residence
  • You have to earn at least £25,000 a year to qualify for such a loan

According to an interesting article in The Times, "Holiday-lets can be a good investment. The upfront purchase costs can be steep, but holiday-let properties in popular destinations can often be rented out for far higher rates than standard rentals.Provided you can find enough short-term tenants to fill your property, you could create a handy second income. "

holiday let mortgages

What Impacts the Total Cost for Holiday Lets Loans?

The overall cost of holiday lets mortgages are influenced by various aspects such as:

  • The size of the property you would like to purchase, the square footage and the number of rooms available
  • The location of the property to be bought
  • Access
  • The condition of the property.

For the deposit for such a loan you will need somewhere between 25-30% of the overall value of the property. The lender will probably ask for an estimate of the total amount you expect to make each year from the rental. To qualify for such a loan, you have to prove you can afford to make repayments each month of 125% to 145% of the monthly mortgage payments.

Holiday lettings have a short-term nature and the available mortgages are usually more expensive than conventional ones. The good news is that such a loan has tax benefits that should not be ignored such as the possibility to deduct mortgage interest payments from the rental; income; this means a lower overall tax bill.

How to Get Self Employed Mortgages?

Individuals who are determined to apply for self employed mortgages can start by making themselves more attractive to lenders. This means that they have to prepare for this process in advance to increase their chances of getting the loan and to:

  • Get their credit ready
  • Sort out their spendings and keep their expenses under control
  • Save money so that they can afford a higher amount for the deposit
  • Speak to a qualified mortgage broker
  • Be honest and organised
  • Be able to provide all the necessary documentation.

There are a lot of changes because of the covid pandemic and the war. But are people going on holiday, in the UK? Is it still a profitable business? How to buy a holiday to let house?

The pandemic changed a lot of our habits and made us more cautious. But when it comes to city breaks and holidays, because of the lockdown, most people are willing to go on a vacation. In this way, the requests for holiday let mortgages rose, and this model of business is a successful one, despite the COVID pandemic or the Russia – Ukraine war.  More than that, many landlords decided on moving home mortgages, to rent their houses.

What Are Holiday Let Mortgages

The mortgage market has a very important role in the real estate market, and this is not just for buying properties. Among the most popular mortgages for landlords are  holiday let mortgages , which allow them to invest in property and rent it out when they want to. This enables them to take a break from their properties if they need to do so.

While there are still some lenders out there offering this type of finance, the number of options available has decreased significantly since the start of the financial crisis . This is partly due to the fact that many lenders perceive holiday let properties to be riskier than standard buy to let properties. However, there are still some options available if you're looking for a holiday let mortgage. You'll just need to be prepared to put in a bit more legwork to find them. There are some things you need to consider if you're thinking about taking out a holiday let mortgage in today's climate.

Are Holiday Let Mortgages a Profitable Business?

It's no secret that the UK economy has been in a bit of a state recently. With Brexit looming large on the horizon and the general sense of uncertainty that surrounds it, many businesses were struggling to stay afloat. The holiday let mortgage market was no different. But the pandemic came and things changed 180 degrees. Because of the long lockdown and the difficulty to go abroad on vacations, people started to search for domestic houses to rent .From here, a great business opportunity came: the holiday to let houses.

What is the Difference Between Holiday Let Mortgages and Moving Home Mortgages?

There are a few key differences between holiday to let mortgages and moving home mortgages. The main one is that holiday to let mortgages are usually taken for a shorter-term rent, like a weekend or one week. There are better periods in the year when people usually rent a house for vacation, like summer, or Christmas. These are very profitable periods when landlords are taking huge advantages.  Moving home mortgages are designed for people who already have a house but they decide to move to another one.

Another key difference is that holiday to let mortgages tend to have higher interest rates. This is because the lender is taking on more risk by lending money to someone who may not be able to keep up with repayments if the property does not generate enough income. Finally, holiday to let mortgages also tend to require a larger deposit than moving home mortgages. This is again because of the increased risk involved for the lender.

Despite these differences, both types of mortgages can still be a good option in today's market. Interest rates are low at the moment, so even though holiday to let mortgages have higher rates, the overall cost of borrowing may still be lower than it would be for moving home mortgages. And with property prices rising, now could be a good time to invest in a holiday rental property.

Tips You can Rent a Holiday House

The traditional way of renting a holiday house is through a letting agent. This can be expensive, as the agent will usually take a commission of around 10-15% of the rental income. However, there are now other ways to rent a holiday house which can be much cheaper.

One option is to use an online holiday letting platform such as Airbnb or HomeAway. These platforms allow you to list your property for free and then charge a commission of around 3-5% when someone books it. This can be a great way to save money, as you will only pay commission on the nights that your property is actually rented out.

Another option is to rent your holiday house directly to guests. This can be done through websites like Owners Direct or Holiday Lettings. You will need to pay a small listing fee to advertise your property, but you will then keep all of the rental income yourself. This is a great option if you are confident in your ability to market your property and deal with guests directly.


The current economic situation has made many people think twice about investing in holiday homes, but there are still plenty of opportunities out there for those who are willing to take the plunge. Despite the challenges that the industry is facing, there are still some lenders who are willing to offer holiday let mortgages, although they are often at higher interest rates than standard buy-to-let mortgages. This is because the risks associated with holiday lets are seen as higher – for example, if there are no bookings for a couple of months then the mortgage repayments may not be covered.

If you're thinking about investing in a holiday home, now is a good time to do your research and find out what's available. There are still plenty of deals to be had, and with careful planning, you can make sure that your investment is a wise one.

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