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Original poster

Holiday homes

43 replies

MGFM · 07/07/2017 18:28

After some positive stories about holiday homes.

Situation : we have our own house with a £250k mortgage. Equity about 70-80k. Quite steep repayments at the moment of around £1400 but hopeful that will drop when we remortgage.

We own a buy to let which was an 'accident'. Mortgage 130k. Equity 70-80k. The rent just covers the outgoings. We actually undercharge out tenant but they are excellent and they have been there 4 years and keep the place in good order so can't see us ever charging going rate.

We have 60k in stocks and shares isa. I want to take this money and buy a holiday let in Cornwall. We make a few thousand a year on the stocks and shares isa. I just don't know whether it would be a good investment. I want out money to work for us. I also do have a conscience and part of me knows it isn't great for the locals for people to buy Holiday properties so I am still on the fence.

We both work full time and our family income is around 95k before tax but we have quite steep nursery costs and a small amount of debt in the form of 0% finance on a few things and a little bit in a 0% credit card. We don't touch the isa. We add £250 to it each month.

Any advice?

OP posts:
RTKangaMummy · 07/07/2017 18:33

Where do you live?

How often would you go down to Cornwall?

How long each time?

Would you go all year or just spring and summer and beginning of Autumn?

As in, March to October?

RTKangaMummy · 07/07/2017 18:35

Why do you not want to pay off your mortgage?

Original poster
MGFM · 07/07/2017 18:36

We live a 4-5 hour drive.
We have family in Cornwall so might go down for a few weeks in the summer and a week in the winter but extended family would probably use it aswell. We would need to rent it out to cover the costs.

OP posts:
Original poster
MGFM · 07/07/2017 18:36

But as we get older we would probably use it more. I like the idea of having in when we retire - which isn't for many years but still

OP posts:
Original poster
MGFM · 07/07/2017 18:37

We will be working for another 20 years at least. Probably 25 years.

OP posts:
Original poster
MGFM · 07/07/2017 18:37

So would hope to pay off mortgage in 25 years

OP posts:
RTKangaMummy · 07/07/2017 18:38

Yes I get your reasons but why not pay off mortgage?

RTKangaMummy · 07/07/2017 18:41

So you want to buy a house/cottage to live in for at most 4 - 6 weeks a year?

Would your family pay rent too?

How will it be rented out of season?

How would you market it to make it pay in Nov and January and Feb?

Original poster
MGFM · 07/07/2017 18:43

Oh sorry - you mean why don't we want to use the 60k to pay off mortgage? Well I guess that was never the purpose of that pot of money. My husband started saving it when he was 19 separate from a deposit for a property. He would be happy to keep paying into it for another 20 years and have probably about 120k in cash.

OP posts:
Original poster
MGFM · 07/07/2017 18:45

I would only rent it out enough to cover the costs of running it which would probably mean July/Aug and a few weeks off peak. By all accouts it seams property in Cornwall rents easily in peak season. If family wanted to use it off peak we wouldn't charge. If you wanted peak we would probably discount it.

OP posts:
RTKangaMummy · 07/07/2017 18:45

Oke doke

So if interest rates went up xxx% would you still be able to pay 3 mortgages?

Cantseethewoods · 07/07/2017 18:47

We own a house in Dorset- use it 3/4 weeks a year depending on how often we come home (we live in Asia) and rent it the rest of the time. One issue is that it is extremely seasonal- we are booked solid from Easter to end of September and then rarely anything other than maybe an October half term and Christmas/ NY if we're not using it ourselves. We are cash flow positive (agency, cleaning and laundry fees add up- there's also stuff you don't think about- we have to go to the tip because rubbish collection is only every 2 weeks and the bins fill way before then) but it would not cover a mortgage on the property. The yield is not great and from a pure investment perspective we'd be better off in equities. If you are planning to use yourself plus let extended family use it, you need to be careful that you don't cannibalise all your peak weeks

I love having the house as a base when we are home so I am positive about it in that respect but it's not a great investment. Admittedly, we don't "thrash it" as much as we could but that takes time and effort and you have to decide if you have the time and effort to invest.

Badbadbunny · 07/07/2017 18:47

Have you factored in the tax you'll have to pay on the rental income?

Original poster
MGFM · 07/07/2017 18:50

The rise in interest rates is of course a risk . Yes we probably could cover it - well once we aren't paying nursery costs anyway!

OP posts:
Confusedandintrigued · 07/07/2017 18:51

You will pay income tax on rental income. No mortgage relief as of April

Cantseethewoods · 07/07/2017 18:51

Sorry- I don't understand- are you planning to get a mortgage on this property, and if so, how are you planning to pay for that?

Confusedandintrigued · 07/07/2017 18:52

Meaning you pay tax on any and all rental income you receive. Not just the profit after you've paid your mortgage on it.

I wouldn't touch but to let with a barge pole anymore. No money in it

Original poster
MGFM · 07/07/2017 18:54

I don't care about making a day to day profit. We don't make anything on our flat either but it is part of our pension once the mortgage is paid off.

I think holiday lets have different tax rules but yes I think we would be able to cover the tax bill with our rental income

OP posts:
Frillyhorseyknickers · 07/07/2017 18:58

We have two cottages in north Norfolk, they rent for about 75% occupancy taking into account winter which is good - Norfolk has year round tourism IF you aren't willing to allow dogs.

We purchased outright but you need to factor instamp duty at the higher rate, and also some councils charge a premium council tax for holiday lets.

You have all the usual utility bills but larger because when people are on holiday and paying for it, they don't care about leaving every light on and the lid off of the hot tub all night.

We've aimed at top end rentals and do get most people behaving, had to get rid of wooden worktops fairly quickly because people have just ruined them with pans etc.

Cantseethewoods · 07/07/2017 19:01

holiday lets have different tax rules

Yes, but you have to make it available for most of the year / actually let for a certain number of days to get that tax treatment and it's not much more favourable.

RTKangaMummy · 07/07/2017 19:01

We had holiday home and it was great so not against them SmileSmileSmile

It was great for us and DC loved it but we didn't rent it out so everything was ours iyswim 

But we didn't have any mortgage to pay hence why we didn't need to rent it out and so we had freedom to go there when we wanted and everything was as we had left it

We were only 90 mins away so could go at weekends too SmileSmileSmile

I guess if you think about all the ifs, buts and maybes then it could work, good luck @MGFM Smile

Original poster
MGFM · 07/07/2017 19:02

There are so many reasons not to do it but having a holiday home when we are retired that is paid off would be lovely. It is a risk as with most things when it comes to investments. The market could bottom out of the stock market and our isa could plummet.

OP posts:
RTKangaMummy · 07/07/2017 19:11

Just thought if you want to use it during school holidays (when your little DC are in school) then that will be same time as your guests want to rent it from you

Or will you stay with family down there if house booked up?

Or just block out the weeks you want to stay there?

Original poster
MGFM · 07/07/2017 19:13

Yeah - once the kids are in school we would probably use it one week in peak season. Or depending on what we need to cover the costs.

OP posts:
Malfoyy · 07/07/2017 19:15

Frilly are you saying places rent better when don't allow dogs? For some reason I thought it's rent better!

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