Having a holiday home or serviced accommodation business has the potential to generate significant returns above that of a conventional buy to let property, it allows the borrower to have a first charge loan using a residential property as security, whether as an investment or repurposing an existing building.
A holiday home mortgage is set up so that the property can be rented over short-term periods only, with restrictions in place for long-term tenancies and the mortgage repayments covered by the rental income.
Holiday let home mortgage providers will lend to a set percentage of the property value, this is referred to as loan to value (LTV).
As a long-term lending product, the interest rates tend to be very competitive with often a choice of both fixed and variable rate products. Fixed-rate mortgages allow the borrower to plan monthly expenditure whilst a variable rate mortgage holds the potential of a decreasing monthly payment.