Following the holiday let craze of the pandemic, many property investors now need to refinance holiday let properties. Find out how to avoid paying more than necessary on your holiday let mortgage in 2025.
A Look Back
Five years after Boris Johnson’s lockdown announcement, the property investment sector is a different market indeed. During the pandemic, we saw a Stamp Duty holiday, borrowers moving to the countryside from commuter zones, and, most notably, a rise in the holiday let market.
Holiday lets offered property investors a new opportunity, with yields of over 10%, security for their portfolios, and considerably high levels of demand from UK holiday-goers.
There was particular demand for seaside locations, with Devon, Dorset and Cornwall being hotspots for investors. The best properties in top locations commanded higher sale prices, way above the market rate, and were happy to outbid one another. Coupled with historically low interest rates and purchase activity, the holiday let market was booming.
Mortgage Rates: Now and Then
Due to the uncertain times, many key mortgage lenders withdrew from the market, including many that offered holiday let mortgages. We went from around 20 lenders to 9 and 160 product options to 60.
Furthermore, Building Societies were particularly selective about who they’d lend to, mainly due to the number of people on furlough.
However, this gap in the high street market led to some specialist lenders launching new, innovative products for the holiday let space. With the Base Rate at just 0.10%, mortgage interest rates were extremely competitive.
Between 2020 and 2021, the specialist mortgage rates averaged between 3-4%, meaning most investors fixed for 5 years to secure these extremely low deals for longer. Unfortunately, if your holiday let mortgage is now up for renewal, you face a significant increase. For some, you may even see your monthly repayments more than double in the new, higher-interest landscape we now occupy.
How Can We Help?
If your holiday let mortgage is up for renewal in the next 3 to 12 months, and you want to secure the most competitive rate, you must discuss your options with a broker now.
By working with our commercial team, we may be able to arrange a more competitive deal than you could access elsewhere. Your broker will consider the following factors to help find you the best rate possible:
- Details of the holiday let income. For example, the last 2-3 years of your financial accounts
- Details of your future bookings/projections of holiday let income from a reputable holiday letting company
- A fully completed property portfolio schedule
- Tax calculation. The last 3 years for each Director or partner
- Details of your holiday letting agent's commission for bookings and changeover/ cleaning
What rates can you access?
If your holiday letting income is strong and provable, you may want to look for a 2-year discounted rate, given that the interest rate would reduce if the Bank of England Base Rate drops (which it’s likely to do).
For Limited Company borrowers, you could access 2-year discounted rates from 5.93% or 5-year fixed rates from 5.98% with fixed £999 arrangement fees and free valuations.
For those borrowing in their own name, 2-year discounted rates start from 5.33% and 5.48% for a 5-year fixed rate.*
Whatever your mortgage plans are, we can help. As mentioned, we can review your holiday let properties and see how we can save you money on your mortgage payments and arrangement fees.
To get started and discuss your holiday let mortgage options, call us on 0345 345 6788 or get in touch here.
*All rates are for illustrative purposes only and are subject to change.
Speak to mortgage maker
To see how our experts can help, get in touch by calling us on 0345 345 6788. We’ll chat through your circumstances and plans on the phone and start exploring your options right away.
Alternatively, submit an enquiry online here, and we’ll get in touch at a time that best suits you.
