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?
• For purchases before January 2017, we require 125% income cover ratio (ICR).
• For purchases after January 2017, we require 145% income cover ratio (ICR).
We require the below as rental coverage:
- For 2 & 3-year fixed and discount products: Product Rate +2%
- For 5-year fixed rate products: Product Rate +0%
- For 5-year discount products: Product Rate +2%
Important: A minimum rate of 5.5% will always apply.
Based on a 2-year fixed rate product with a product rate of 6% for a property purchased after 2017
Stress rate: 8%
High season: £700, Mid season: £500 & Low season: £300
Rental average: £500
Monthly rental is calculated as follows:
• Average monthly rental is £500 x 30 (weeks) ÷ 12 (months) = £1,250
• Rental coverage calculation (RCC) is £1,250 ÷ 1.45 = £862.07
• RCC divided by current stress rate is £862.07 ÷ 0.08 = £10,775.87
• RCC multiplied by 12 months is £10,775.87 x 12 = £129,310.44
This means the maximum borrowing would be £129,310
View our Holiday Let mortgages
Want to find out more, view our Holiday Let range.