Can I remortgage my house to buy a holiday home?

(11 Posts)
Thunderbolted Thu 06-Aug-20 09:06:29

Just that really. I'm guessing we'd get a better mortgage rate for our main residence than for a holiday home (which we'd have to rent out).

We can probably scrape together the funds to buy from all over but we'd then need to remortgage our house or get a mortgage on the holiday home to put back in some of the places we got the cash from.

I'm not sure what a bank would think if we tried to remortgage in these circumstances. Anyone got any experience of this?

OP’s posts: |
bedface Thu 06-Aug-20 09:22:12

How about you don't buy a second property. No-one needs two houses.

Allthepinkunicorns Thu 06-Aug-20 09:25:36

You can use the equity from your home to get a buy to let but you need to have quite a bit of equity. Also be warned that the valuers will under value your house. We looked Into this last year and didn't go ahead in the end.

Fatted Thu 06-Aug-20 09:28:10

If you can't afford a second home, don't buy one. Just move to the quaint little village for the entire year instead.

JoJoSM2 Thu 06-Aug-20 09:31:57

If you’ve got enough equity and can afford the larger mortgage on your main home, then you could do that. As cash buyers, you’d be in a great position and it seems simpler to only have one mortgage.

breadcakebiscuits Thu 06-Aug-20 10:21:51

You need to own your holiday house outright because if it’s mortgaged your lender will treat it as a buy to let - so restrictions on how short your lets can be, you can’t let to family etc which defeats the point of having a holiday house.

My parents briefly considered doing this (mortgage free with a shedload of equity after living in the same house for 30 years). However they would have had to take 40% out of their house to buy outright and that was too much for them because although that 40% was charged at just 2.5%, the allowed mortgage term was much shorter because of their ages.

Toilenstripes Thu 06-Aug-20 10:26:44

No way. Unless you can pay cash don’t buy a holiday home. Live within your means.

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mumwon Thu 06-Aug-20 11:03:12

holiday homes upkeep cost more than you think
Are you talking a house, or one on holiday camp (or posher word)?
If a house you will have to pay full council tax these days (some areas more than that) you insurance will be a lot higher & the excess will be higher when unoccupied or guest use
You will need to factor in heating & power costs think about upkeep & the garden (if you have one)
if you are thinking about renting - will you be able to get enough people & pay for cleaning & repairs (because damage & loss will happen)
you can extend your mortgage but it will cost

PersilOrAriel Thu 06-Aug-20 16:02:48

I did exactly what you’re suggesting.

Normally you would be able to get a special holiday let mortgage and there are brokers who specialise in this. Note this is not the same as a buy-to-let mortgage, they are completely different so you can ignore some of the posts above.

We couldn’t get a HL mortgage as it was a new build and had no history, but we had no mortgage on our main home, so we mortgaged that instead. You have to be very clear to the bank why you are doing so, otherwise you won’t be able to offset the mortgage interest against your HL income.

Thunderbolted Mon 10-Aug-20 19:25:51

Thanks all, I completely forgot I posted this until now!
It would be for an investment. We're both self employed so it's partially a way of diversifying and partly a way of having a holiday home part time. It's expensive so we'd have to set it up as a furnished holiday let.
@PersilOrAriel I assume your mortgage company was OK with this but did you have to show a business plan or proof of prospective income?
We'd probably be able to pay off the house entirely in a couple of years so it's not too much of a stretch, more a short term funding issue.

OP’s posts: |
intheningnangnong Mon 10-Aug-20 19:44:19

I’d be wary of it as an investment. It’s hard to make money as servicing costs are often high.

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