At this time of year there’s nothing better than popping off to the seaside on a summer getaway, or having a place in the sun to go to when the weather turns sour. Having a holiday retreat can be a great way to escape the pressures of everyday life and have your own personal retreat to go to to relax and unwind.
However, buying a holiday home shouldn’t be an emotionally driven purchase. It’s important to weigh up whether you can afford a second property. It’s important that you work out whether the financial benefits do outweigh the financial implications. Taking on a second mortgage, can come with a range of benefits, especially if you’re looking to rent out the property.
You’ll need a rental estimate letter during the application for a second mortgage. The lender will only consider around 50-75% of the rental income as part of the eligibility criteria and so you may need to have more put aside in your nest egg to buy that holiday home.
The rental estimate letter will enable you to see what you could potentially be earning from rental income. This is a good idea as you can then see how much rent you are likely to get against the monthly mortgage payment and see if you’re going to make a profit if you let out the property.
However if you are considering buying a holiday home to let out, you need to consider the letting season. If you want rental income all year round, then you’ll need to choose a location which has good weather all year round for instance. If you decide to buy a property abroad, choose a location which has good transport links and is well served by airlines. Don’t just rely on one airline for instance, as you may find that they stop that route in the future.
When buying a property, look for demand. If you’re looking for a buy-to let, then ensure you’re investing in an area which is popular but one where demand outweighs supply. Your property will then be a good financial investment.
Think about the area of the property that you wish to buy in. Could your lovely apartment in a picturesque setting end up becoming a meat market at night?
When it comes to the property itself try and find a property which has an unique selling point – whether this is an open fire, a luxurious balcony, or a room with a view. These aspects will appeal to holiday makers over other properties in the area.
Ultimately buying a holiday home should make you happy and be a place where you can relax and enjoy yourself. Although it may be a good idea to rent out the property when it’s not in use, you need to feel that it’s the right property for you. It all depends on the reasons as to why you’re buying a holiday home. If it’s for investment purposes, then you need to consider the financial aspects. Yet if it’s for pleasure, think about yourself and whether or not you love the place and can see memories being formed there.
Photo Credit: Flickr/David Blaikie