Added: 5 August 2019

Ipswich launches holiday let mortgage range

All products are available exclusively for properties purchased with the intention of letting for holiday purposes and need to be based in the Society’s heartland area of Suffolk, Norfolk, Essex, Cambridgeshire, Hertfordshire, Bedfordshire and Buckinghamshire. The new products are available to direct applicants, intermediaries based in the Society’s heartland area and members of selected networks and clubs.

Richard Norrington, CEO at Ipswich Building Society, commented: “It’s no surprise that properties located within rural settings and coastlines are the most popular holiday let destinations.*

“I am confident that our heartland region of Suffolk and the surrounding counties will be of keen interest to people thinking about buying a holiday let property. Brimming with beautiful countryside and coastal locations, this area generates high demand from UK tourists seeking a ‘staycation’, as well as foreign holidaymakers looking to discover a piece of rural Britain.”

Products

The following products are all available with a maximum 80% LTV, and are available on capital and interest or interest only repayment basis:

• 2-year fixed rate at 2.95% until 30 September 2021 (5.4% APRC*)

• 2-year discount rate at the Society’s Standard Variable Rate (currently 5.74%) minus 2.94%, giving a current pay rate of 2.80% for two years from the completion date (5.4% APRC*)

• 3-year fixed rate at 3.10% until 30 September 2022 (5.2% APRC*)

All products have an application fee of £199, a completion fee of £950, a CHAPS fee of £35 and a tiered valuation fee based on property value applies. All remortgage applicants benefit from a free valuation up to a maximum property value of £1m and access to fee assisted legal services.

During the initial mortgage term, the Society offers fee-free overpayments up to 50% of the original loan amount.**

Criteria

All products are subject to a maximum 25 year term with no maximum age restriction; a minimum loan cap of £75,000 and a maximum loan cap of £500,000 apply, with a minimum property value of £100,000.

To calculate the potential rental income, a Holiday Letting Agent letter will be required confirming the known weekly rental income, or anticipated revenue during low, medium, and high season. An average will be taken and multiplied by up to 35 weeks to give an indicative annual figure.*** Owners may occupy the mortgaged holiday let property for personal use for up to 60 days per year.

Applicants

All applicants must already own or mortgage their own residential property, and applications from first time or existing holiday let owners are welcomed. A minimum age of 21 applies if an existing property landlord or 30 for a first time landlord. Portfolio landlords or limited companies will not be eligible for these products; applicants are permitted to own a maximum of three rental properties (holiday let and buy to let) inclusive of the mortgage they wish to apply for.

For joint applications, at least one applicant must have a minimum salary of £25,000 gross p.a****, and applicants' employed income, pensions, investments, or additional sources of income can be taken into account when calculating affordability. All holiday let applicants will also benefit from the Society’s manual underwriting process.

Kate Ley, Head of Mortgage Sales at Ipswich Building Society, said: “Our customers are always at the heart of our product development process. We hope that by applying a competitive minimum income cap and accepting pension income when assessing affordability, we can help retired applicants with their holiday let decisions as well as providing options for younger applicants, such as those first entering the holiday let market.”

The property

The intended property must possess a full Property Title, be of single dwelling, and must be of standard construction. Properties situated within a holiday park, houses of multiple occupancy, and AirBnB lettings will initially not be considered.

Properties may be an existing holiday let or a residential property to be purchased for the purpose of a holiday let. New builds, flats and leasehold properties are also permitted.

Richard Norrington, CEO at Ipswich Building Society, continued:

“The future of the UK holiday let market looks promising; a fall in the value of the pound has made the UK a more affordable destination for overseas tourists, as well as making ‘staycations’ a more attractive option for UK holidaymakers. We are delighted to be introducing a range of holiday let mortgage products and to be potentially opening up an opportunity to those who thought this was out of their reach.”

Managing Director at largemortgageloans.com, Richard Merrett, also commented on the Society’s new offering: “With the recent tax changes encouraging more and more people to choose a holiday let over a traditional buy to let, this product is very welcome in what is currently an underserved sector of the mortgage market.

“Offering an array of excellent features such as 80% loan to value, availability to first time landlords, no maximum age restriction and a modest £25,000 minimum income criteria, I believe it will be extremely popular.”

Notes to editor

* Figures released in Visit England’s 2018 Domestic Overnight Tourism Performance Summary reveal that seaside, countryside/village destinations made up 55% of domestic holiday trips in 2018.

** For overpayments in excess of 50% of the original loan amount, or early redemption, an Early Repayment Charge (ERC) applies. For fixed rate products this is at 3% and for discount rate products at 1%. For overpayments this charge is calculated on the overpayment amount that exceeds the 50% allowance, and for early redemption is calculated on the original loan amount.

*** This figure must be at least 145% of the annual mortgage repayments (based on the initial interest rate + 2% or a minimum of 5.5%, whichever is greater).

**** Property investment and/or holiday lets must not be the applicant’s primary source of income.