Holiday let mortgage

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
loveka
Posts: 88
Joined: Fri Aug 19, 2016 10:32 am

Holiday let mortgage

Post by loveka »

This is a hypothetical issue, but something that might happen.

If I bought a holiday let which was a main house and a studio, with 2 sets of council tax being paid but on one title, would it be possible to live in the studio and rent out just the main house? Especially if the income from the main house was 125% of the mortgage payments.

Or, if there was an outbuilding in the grounds of a holiday let I bought which I then converted to a habitable space, could I live in it? I asked a mortgage broker this one and he had no idea. It would seem to me that the mortgage company would be lending on the existing property, not the potential property. However, in that scenario I would be on the electoral roll of my holiday let as it would be the same address. I am guessing this is the only way they can check if you are living in your holiday cottage, so they would think I was living in the property that has the mortgage on it.

One more question! Have any of you had a problem getting a residential mortgage on a property with an annexe? Thanks!
CarolineJ
Posts: 65
Joined: Sat Apr 29, 2017 3:52 pm
Location: North coast of Scotland
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Post by CarolineJ »

I have a 3-bed house with completely separate 1-bed annexe. The lender never even queried it and put it down as a 4-bed house! The whole thing is on one council tax payment though and this was in 2008, just pre-credit-crunch, when no-one was checking too carefully.
Faint heart never won fair holiday let...
angi
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Joined: Fri Sep 04, 2015 7:34 pm
Location: cyprus
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Post by angi »

If you have a buy to let mortgage or a specific holiday let mortgage this would cover the whole title so you wouldn't be allowed to live in the property. The main problem is that the insurance would be specific to rental property and crucially not residential so if something serious happened that required a major claim and it transpired you were living there it would invalidate the insurance. If you then subsequently develop buildings within the same title would they not also come under the same rules as they were mortgaged under the same title. The person who pays the council tax wouldn't come into it otherwise all tenants would come under that remit. Nobody can stop you living there but in my view the risks are too high. The only way would be to either switch to a residential mortgage at some stage in the future if you decide to live there full time. I believe there are some companies that allow a mixture of both.
Hope that makes sense! :)
bobby spray
Posts: 28
Joined: Tue Jul 17, 2012 2:15 pm
Location: Stirling scotland

Re: Holiday let mortgage

Post by bobby spray »

loveka wrote: One more question! Have any of you had a problem getting a residential mortgage on a property with an annexe? Thanks!
No - this is what we do. it's a bit of a grey area however and it depends how much you wish to disclose to your mortgage provider. full disclosure will likely just give them a headache and they'll decline to offer a product. in our case our mortgage is small compared to the price of the property so we took the mortgage onto our main residence and the annex is (in theory) mortgage free.
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